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Market maker Meaning

A firm or individual that provides "Liquidity" to a market by constantly placing both "Buy" and "Sell" orders. They earn a profit from the Bid-Ask Spread (the difference between the price they buy at and the price they sell at).

Market makers are the "Essential Service Providers" of the financial world. They ensure that when you want to sell, there is always a buyer, and when you want to buy, there is always a seller.

Without them, markets would be "Gappy" and "Illiquid," and it would be impossible to trade quickly. In modern markets, most market making is done by high-speed algorithms.

In the decentralized world, this role has been "Democratized" through Automated Market Makers (AMMs), where anyone can become a market maker simply by "Providing Liquidity" to a pool and earning a share of the fees.

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