Market Maker
An individual or institution that provides liquidity to a market by placing both buy and sell orders, profiting from the spread. In DeFi, AMMs replace traditional market makers with algorithmic liquidity pools.
Why It Matters
Market makers are individuals or firms that provide liquidity to the cryptocurrency market by buying and selling assets. Their involvement ensures that there’s always a market for traders, which helps maintain price stability.
Example
For example, a market maker might place buy and sell orders for Bitcoin at various price levels. This allows traders to execute their orders quickly without causing significant price shifts.
Beginner Context
For those new to crypto, understanding market makers can clarify the role of liquidity in trading. They contribute to smoother trading experiences, making it easier for newcomers to buy and sell cryptocurrencies.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
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Cold Storage
Keeping cryptocurrency private keys entirely offline to protect them from online hacks. Cold storage methods include hardware wallets and paper wallets, and are recommended for long-term holders of large amounts.
Candlestick
A chart element used in technical analysis that displays four price points for a given time period: the opening price, closing price, highest price, and lowest price. Green candles indicate the price rose; red candles indicate it fell.
Flippening
A hypothetical event in which Ethereum's market capitalization surpasses Bitcoin's, making Ethereum the largest cryptocurrency by market cap. The term is used by Ethereum supporters to describe this potential milestone.
Farming
Short for yield farming. The practice of deploying crypto assets into DeFi protocols — such as liquidity pools or lending markets — to earn rewards, interest, or governance tokens. Returns can be high but risks include smart contract bugs and impermanent loss.