Maker - why is it needed in cryptocurrency trading?

A market participant should clearly understand that the participants of a trade are always divided into makers and takers. First and foremost, this classification affects the commission paid by the trader for each transaction. Each side also performs additional functions in the market.

A maker is someone who places a limit order. This means that the order will not be executed immediately but at a later time because the order is placed above or below the current market price of a specific cryptocurrency. Makers act as liquidity providers, as a large number of orders increases interest in the instrument, attracting more participants to the trading pair.

Cryptocurrency exchanges incentivize makers as they create activity, so their trades are either commission-free or subject to minimal fees. Makers work with limit orders, placing their offers in the order book. The offer must be below or above the current price of the crypto asset.

Advantages for makers include:

• They have the opportunity to buy assets below the market price.
• They sell accumulated tokens above the market price.
• Large players can engage in price manipulation and influence the outcome of their own trades.
• Maker trades are subject to low or no fees.

However, there are also disadvantages. Makers understand that their orders are time-delayed, and orders are not executed instantly. Traders have to wait until the other party accepts their trade price, which can sometimes take weeks or months.