The terms “market maker” and “marketable” or “maker” and “ticker” are familiar to anyone who has used digital currency exchanges. As you can see, the word “market” is common to both. Digital currencies, like any other asset, need an environment for buying and selling. In other words, in order to trade digital currencies, we need a dedicated market, which is currently provided by digital currency exchanges in this market.
Today, digital currency exchanges have various types and are divided into two types: centralized and decentralized. How to make transactions and complete orders in these exchanges is different from each other. Newer and more decentralized types of digital currency exchanges for trading from an innovation called «Automated marketer” use.
Read more: What is an Automated Marketer (AMM)? Familiarity with the beating heart of decentralized exchanges
The innovation of decentralized exchanges in the world of digital currencies is extremely valuable; But the truth is that despite the increasing popularity of decentralized exchanges, the largest number of users are still active in centralized exchanges because the facilities and opportunities that these exchanges offer are very diverse and it is still easier for most users to work with them.
Centralized exchanges based on a mechanism called «Order OfficeThey work (Order Book). The way these exchanges work is that first the users register their purchase and sale orders (mentioning the offered amount and amount) in the order book. The exchange automation engine then matches sales orders based on bid prices and completes them.
Therefore, in these exchanges, there are two types of users: the user who registers the purchase or sale order and the user who selects this order. The first group of users is called market maker and the second group is called market taker.
In fact, if you register a custom digital currency exchange at a different price from the market (Limit order), so that your order is not completed immediately and the orders are processed, you are a maker and in most exchanges you will have a commission advantage. . On the other hand, if you register at a custom exchange with a market price (Market order), so that the order is completed immediately and does not enter the trading office, you are a ticker.
In this article to help Content Written by Bainance Academy, we will examine the concept of maker and taker.
An overview of the mechanism of digital currency exchanges
Exchanges in all markets, including forex, securities or digital currencies, are where buyers and sellers meet. If these intersections do not exist, people will be forced to advertise on social media or something similar. For example, if you want to exchange your bitcoins with Ethereum, you have to post your offer on social networks and hope that maybe someone will find and accept your offer and be willing to trade.
Digital currency exchanges have solved this problem and provided a relatively secure environment for digital currency trading. With digital currency exchanges, you no longer need to look for a party to the transaction and find someone who wants to buy your digital currencies or sell your digital currencies. In digital currency exchanges, you will find many users who are looking to make a transaction and therefore, your transactions are done in the shortest possible time and easily.
If you have used digital currency exchanges before, you are probably in one of the maker (marketer) or ticker (marketable) maps without your knowledge. You may even have played both of these roles in different transactions. Traders sometimes act as both a maker and a ticker in a market.
Makers and tickers are the lifeblood of many trading platforms, and it is their absence or scarcity that distinguishes strong exchanges from weak ones. As we mentioned, in this article we will talk about the concept of maker and ticker; But before that, let’s take a look at a key feature of digital currency exchanges and digital assets that you must have heard a lot about: Liquidity.
What is liquidity?
What do we mean when we say, for example, that one asset has liquidity or another asset has no liquidity? Liquidity means how easy and fast an asset can be sold. The higher a liquidity of an asset, or in other words, the more “liquid it is,” the easier and faster it will be to sell and convert it into cash or any other asset.
An ounce of gold is an asset with high liquidity, or in other words, an asset.Cash” Is; Because in a short time it can be easily converted into cash. In contrast, assets such as real estate have lower liquidity than gold, in other words.Cash” are; Because more time is needed to sell them. Market liquidity is almost the same.
A market with liquidity is a market that at that You can buy and sell assets easily and at a fair price. In such a market, the demand for the asset is high and the supply of those who want to sell it is very high.
When the volume of activity in a market is so high, the highest bid price for sale and the lowest bid price for buy will be in close proximity; That is, where buyers and sellers come to a common ground. As a result, the difference between the highest bid and the lowest bid will be very small. This is the difference between the bid price for sales «Bid price range»مینامند.
In contrast, a low-liquidity market does not have any of these characteristics. If you want to sell an asset in such a market, you will have trouble selling it at a reasonable price; Because there is not much demand for it. As a result, the bid-ask price gap in low-liquidity markets is usually very large.
Now that we are familiar with the concept of liquidity, we turn to the two concepts of market maker and marketable.
Maker (market maker) and ticker (marketable)
As mentioned, a maker is generally someone who creates a buy or sell order and thus provides the basis for a transaction. Ticker is also the person who sees the order with the desired criteria and accepts it to make the transaction. Traders operating in an exchange office have one of these roles. Of course, sometimes a trader can be both market maker and marketable.
Who is the maker or customer?
Exchange offices usually set the price of an asset based on the last completed orders in the order book. The order book is where all buying and selling offers from users are recorded.
An order is actually an instruction that could be something like this: “Sell 2 bitcoins for $ 45,000.” The order is registered in the order book and the order is placed whenever the buyer agrees to buy Bitcoin for $ 45,000. After this transaction, the price of Bitcoin in that exchange will be $ 45,000 (until the next transaction is done at another price).
The example above is an example of a “Limited order (Limit Order)” Is. Limited orders are orders for which special conditions are set. For example, at the time of writing, the price of Bitcoin is a little over $ 39,000, and when you place an order to sell Bitcoin for $ 45,000, you are actually stating a condition that has not yet been met.
In return for this type of order, «Market ordersThere are no specific conditions for them and they will be executed almost immediately after placing the order (at the first available price). For example, when you place a market order to buy 2 bitcoins, you allow an exchange to buy you 2 bitcoins from among the lowest restricted sales orders.
Makers are users who register “limited orders” both in the field of buying and in the field of sales in the exchange office of exchange offices, and in this way, increase the liquidity of the exchange. By doing so, they actually “create” a “buying and selling market” for the exchange and increase the speed and ease of trading in the exchange.
Large traders and institutions (such as those that specialize in high-volume trading) usually take on the role of maker; But small traders can also easily act as makers by placing limited orders.
Who is the ticker or customer?
The role of the ticker or customer is exactly the image of the maker.
Tickers are those who register “market orders” in an exchange office and place their order in the shortest time and at the first available price. They actually use the limited orders that the makers have previously registered to do their trading.
So here’s what happens: Makers increase exchange liquidity by placing a limited order in the order book; Because they make buying and selling easier for users. Tickers, on the other hand, withdraw some of this liquidity through a market order that we described earlier. Tickers do this by completing the orders in the order book immediately.
If you have previously placed a market order or made an immediate purchase in a digital currency exchange, you must have acted as a ticker or picker, and if you have used limit orders, you have appeared as a maker.
Of course, it is important to note that some exchanges (generally lesser-known exchanges with little cash) do not use the “market order” feature and can only register “limited orders”. If you trade in these exchanges, you must register a limited order; But you can still be a ticker. The point is, if your order complements another limited order, you are a ticker.
Maker and ticker fees in exchange offices
Exchange offices earn a significant portion of their revenue by receiving commissions from transactions made between users. This means that every time your order is placed, you pay a small amount for the commission; But the amount of commission varies in different exchanges and also depends on the volume of the order and your role in that transaction.
Makers are usually subject to a discount at digital currency exchanges; Because they help to provide exchange liquidity. High liquidity is a very vital and positive feature for exchange offices. Because trading in an exchange with high liquidity is more attractive, faster and easier for traders than where there is less liquidity.
So it makes sense for exchange offices to welcome makers and charge them less. In contrast, tickers in many cases pay higher fees than makers; Because they do not provide liquidity.
Of course, for most Iranian users who are not authenticated in foreign exchange offices and operate with a basic user level, the maker and ticker fees are no different. For example, in the image below, you can see the transaction fee rate in Bainance Exchange, which at the basic user level (VIP0) for makers and tackers, is 0.1% of the total value of the transaction.
In this article, we tried to explain the concept of maker and ticker in digital currency exchanges and examine their role in these exchanges. By reading this article, you must have noticed that the existence of makers and tickers is defined in exchanges that use the order book; When we say exchange offices that use the book of orders, we mean almost all the famous centralized exchange offices that we know, in addition to a limited number of decentralized exchange offices.
The number of makers and tickers is one of the factors that determine the trading volume of an exchange, and the more credit an exchange has, the more the number of makers and tickers will be.
You know that all the processes that take place in digital currency exchanges are online and offline. Therefore, the concept of “credit” is very important for these exchanges and determines the degree of their reliability. So the next time you want to use a new exchange and validate it, it is not bad to take a look at its order book and check the number and variety of orders.