What is Market Maker?

In finance, a market maker — or liquidity provider — is a company or individual that buys and sells large amounts of assets in order to ensure that the market remains liquid. While not always necessary when organic trading volume is high, many exchanges — both stock and crypto — utilize market makers to ensure liquid markets. Market making gives traders ample trading liquidity, low slippage, and higher trade execution speeds — particularly for larger orders. Market makers "create a market" to earn income, taking a cut of the bid-ask spread of the assets they provide liquidity for.