📢 Introduction to Market Making
📊 Market making is a key tool that provides liquidity in cryptocurrency markets. Liquidity is critically important to ensure the smooth and efficient functioning of markets, allowing traders to buy and sell assets without significant impact on prices.
Decentralized Exchanges (DEX) and Centralized Exchanges (CEX) are the two main types of cryptocurrency exchanges where market making plays a crucial role.
1️⃣ On DEX: Market making helps address issues such as price drops after listing, low trading volumes, and uncontrolled price movements from third-party bots. It generates trading volumes, attracting more liquidity to the pool and securing top positions on rating services. Additionally, market making on DEX organizes automatic price management, enabling volatility control and participation in price setting.
2️⃣ On CEX: Market making assists in managing the order book and the spread. Most tokens without market making activity have a wide spread, making them less attractive to traders. Market making helps narrow this spread, making trading more profitable for market participants.
Advantages of using market makers:
- Creating organic price movement that minimizes risks and makes the chart appealing to traders.
- Maintaining a narrow spread, which helps market participants find economic benefit from trading with your token.
- Generating organic volumes on charts, making trading professional and aesthetically appealing.
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