Recently, some brothers have asked about what market makers are, so I might as well give everyone a systematic explanation.

Simply put, market makers are the "super counterparties" in the market, and they are also the engine of liquidity. Their job is actually quite straightforward—continuously quoting bid and ask prices, using their own funds to place orders at corresponding prices, ensuring that there is always someone willing to buy and someone willing to sell. Imagine, without them, the market would easily fall into a deadlock of "want to buy but can't, want to sell but can't," which is what we call liquidity starvation.

So how do market makers make money? The core logic is four words—buy low, sell high. For example, if a token's current price is $100, they might place a buy order at $99.5 and a sell order at $100.5, and the $0.5 spread between these is their profit. It sounds simple, but in practice, it involves complex algorithms and trading bots, constantly adjusting in a rapidly changing market.

Market makers' income isn't just from the bid-ask spread. Exchanges also reward them with a portion of the trading fees because they provide liquidity, which is a significant income source. Additionally, when new projects launch, they often hire market makers specifically to stabilize the token price and liquidity, which also involves service fees. Plus, they can profit from arbitrage opportunities across different markets with tiny price differences, making their revenue channels quite diverse.

Why are markets and project teams so dependent on them? It's actually quite simple. For trading markets, the bid and ask quotes and order depth provided by market makers act like "shock absorbers," absorbing sudden buying and selling pressure, preventing prices from skyrocketing or crashing due to temporary supply and demand imbalances. For project teams, if a new token has poor trading depth and volatile prices, investors won't dare to buy. Market makers support continuous quoting and depth, creating a stable and trustworthy trading environment, which is crucial for a project's maturation.

There are already many professional leading market makers in the crypto space. Jump Trading is a veteran in traditional quantitative finance and is also very active in crypto. Wintermute was founded in 2017, with a strong algorithmic trading system providing liquidity to top-tier exchanges. GSR Markets is an industry veteran, starting in 2013, focusing on complex trading solutions. DWF Labs is a recent rising star in Web3, involved in market making and investments. These institutions generally have strong capital and technical capabilities, enabling them to survive in this high-frequency, volatile market.

Therefore, the role of market makers is crucial to the entire trading ecosystem. Without them, the market simply cannot function properly.