Market making is a crucial process in the crypto trading business, with the important goal of offering liquidity to cryptocurrencies in the market. Let's explore this in detail, as follows: buying parties in the markets place a bid (the bid) for purchasing a particular crypto asset. A seller with an intent to sell the same type of crypto asset may place their asking price (the ask) for the asset. Usually, the values from the buyer and seller do not match because the buyers usually quote for less value and the sellers quote for more value. This can create a gap between the expectations between both parties, thereby creating a spread.
When the disagreement on the mutual price grows, the spread value widens and creates an illiquid token or cryptocurrency. Illiquid tokens are basically non-tradeable since expectations are not matched. Hence, lower trade volumes create a slowdown for the token and reduce the market capitalization of the respective token. This is detrimental...
