A Brief Introduction Liquidity Provider
Posted By Rohan Dodeja | 31-Jul-2018
What is Liquidity Provider
A Liquidity Provider or market maker is an independent entity which regulates and supply the assets in the market to maintain the ethics and faith in the market. Like in case of cryptocurrency Liquidity provider supplies the crypto assets in
Need Of Liquidity Provider
When a new exchange introduce itself in the market then at that time there will be no order book of
Either exchange dynamically
createan order at runtime by its own.
Or take order from the outside to make
matchof that order.
In first situation when exchange is dynamically creating order at runtime then at that time exchange is losing it’s crypto assets and when the situation comes when entertaining all buy orders a huge sell
Now taking the example of
Create an account in the
Create auth and
secretkey by which you can access their data like order book and also execute order API’S.
Now add balance in the wallets created for your
Like if there is a market of BCH /
XRP ,BCH / ETH or from BCH to any other then you have to buy or have to transfer BCH to Binancefor order execution of cryptos, let’s say suppose you bought initially 10 - 15 bitcoin cash as after establishing market exchange is enough capable of its own executions.
Cases of Liquidity Provider
> Buy / Bid
> Sell / Ask
Case 1 (BUY order)
When an exchange has only buy orders and no orders match in sell orders then exchange has to trade of with the liquidity provider to match it’s user’s buy order now let’s say user commit an order of buying 10,000 XRP in exchange of some 0.50 BCH ( including your exchange commission ) and now exchange will try to match with sell order of
Case 2 (SELL order)
Now exchange has only Sell orders and no matching orders in Buy then exchange has to again trade of with liquidity provider for matching its sell order with its buy order, let’s say user commit an order of selling his 10,000 XRP at 0.6 BCH, our order matching engine will try to execute this trade at higher than 0.6 BCH as for us we just selling at
NOTE: When we are placing the orders at