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Liquidity can be defined as the ease with which assets can be bought or sold without significantly impacting price. In any financial market, liquidity is a foundational concept.
In traditional equities and foreign exchange markets, market makers are licensed entities that commit their own capital to provide both buy and sell quotes for assets continuously. This role ensures that traders can enter or exit positions with minimal friction, even during periods of heightened volatility.
In this regard, BeLiquid is one of many service providers operating in this space, offering tailored liquidity plans and execution strategies across multiple venues.
In cryptocurrency markets, the basic economics are similar. A crypto market maker continuously places bids and offers on an exchange’s order book, creating depth and narrowing the bid-ask spread — the difference between the highest price a buyer is willing to pay and the lowest price a seller will accept.
A tight spread and deep order book are often taken as indicators of liquidity, and they improve price discovery by showing a consistent picture of supply and demand. Without this function, novice and institutional traders alike could face significant slippage. This includes unexpected price movement between order submission and execution, especially for less liquid assets.
Market makers also play a price-stabilizing role. By quoting both sides of the market continuously, they absorb temporary imbalances in supply and demand, which helps reduce volatility. This is particularly valuable in crypto markets, where abrupt price swings are common due to thin order books and fragmented liquidity.
In decentralized finance (DeFi), liquidity mechanisms differ. Automated market makers (AMMs) like Uniswap rely on liquidity pools supplied by users. These pools use algorithmic formulas (rather than live order books) to match trades and determine pricing.
While AMMs have democratized liquidity provision and enabled anyone to participate, they face challenges like impermanent loss and capital inefficiency compared to centralized market-making strategies.
Why professional liquidity management matters
For new or mid-sized tokens, the absence of stable liquidity can have material consequences. Exchanges increasingly monitor not only trading activity but also the quality of liquidity — including depth, spread, and continuity of quotes.
When a token’s pairing does not meet minimum standards laid out in exchange listing agreements, trading can be suspended or delisted altogether. Delisting can sharply reduce a project’s visibility and access to capital, effectively erasing years of community and development efforts overnight.
Professional market-making firms aim to mitigate these risks by offering structured liquidity support. Unlike passive liquidity providers, which may deposit assets into pools or occasional order book placements, professional market makers employ algorithmic execution engines and risk management strategies designed to maintain consistent order books even during volatile markets.
Their systems are typically designed to balance inventory exposure across price levels and across trading venues, reducing exposure to sudden price swings and fragmentation.
BeLiquid: A case study
BeLiquid is one of several firms operating in this market-making and liquidity-management space, focusing on Web3 and token projects that require ongoing market structure support.
Unlike some market-making setups that start with a uniform, template approach, BeLiquid emphasizes tailored plans that define key performance indicators (KPIs) such as spread control, depth targets, and performance monitoring across venues.
These functions align with broader industry practices where firms attempt to reduce slippage, stabilize pricing, and maintain coherent order book behavior across multiple markets — all of which are essential for price discovery and attracting organic trading activity.
The firm also seeks mechanisms intended to preserve liquidity against sharp trader behavior or volatility. Preventing premature depletion of quoted depth may help avoid situations where spreads widen excessively or order books thin out, both of which can trigger exchange surveillance systems.
Such systems may flag tokens for “market risk” when liquidity falls below internal thresholds, leading to reduced visibility or delisting.
Market maker risks
Not all market-making arrangements are created equal. A persistent critique across the crypto ecosystem is that some providers chase artificial volume to create vanity metrics that look healthy on the surface but do not reflect genuine trading interest. Advanced exchange surveillance tools increasingly detect such activity, and tokens associated with manipulative behavior can face reputational damage or listing penalties.
Liquidity provision is not without risk. Market makers often hold significant token inventories. In volatile conditions, price moves can turn narrow spreads into losses rapidly. Capital efficiency, algorithmic accuracy, and continuous risk management are therefore integral to maintaining sustainable liquidity support.
Moreover, the crypto community has discussed industry practices where market-making deals that involve token loans or other incentive structures can unintentionally harm a project.
For example, arrangements where a market maker borrows tokens to provide initial quotes but later sells them aggressively can depress prices and harm investor confidence. Transparency and alignment of economic incentives remain ongoing discussion points for projects engaging external liquidity partners.
Liquidity and price stability
Good liquidity benefits all market participants. Traders enter and exit positions with minimal price impact, yields for arbitrageurs reflect true market efficiency rather than structural gaps, and institutional participants — who often require deeper order books — can participate without excessive execution risk. On the flip side, thin order books invite wider spreads and volatile price action, deterring participation and elevating perceived risk.
Especially for early-stage tokens with limited natural trading activity, professional market makers can play a critical role. By stabilizing prices and sustaining depth, they help projects meet exchange requirements for listing continuity and expand their potential investor base.
Institutional players
The crypto market-making landscape is evolving. Traditional market-making firms are increasingly entering crypto, attracted by the growth in institutional participation and digital asset trading infrastructure.
For example, major firms like Citadel Securities have signaled plans to expand into crypto market making, reflecting broader institutional interest in providing liquidity to these markets.
At the same time, decentralized approaches continue to innovate in liquidity provision, with advanced AMM models and hybrid liquidity designs attempting to balance capital efficiency with resilient pricing.
Regardless of the technical model, the underlying objective remains consistent: improving market depth, narrowing spreads, and enabling traders to transact without undue cost or disruption.
Conclusion: What defines efficient trading
Market making is a core infrastructure function in the cryptocurrency ecosystem, contributing directly to liquidity, price stability, and trading efficiency. Firms that provide structured liquidity and consistent order book support help tokens meet exchange standards and facilitate smoother trading experiences.
BeLiquid’s approach includes algorithmic execution across centralized exchanges and DeFi platforms, dedicated specialists managing liquidity plans, and real-time performance reporting.
However, market makers also face risks and scrutiny, and projects considering external liquidity services should weigh transparency, strategic alignment, and risk exposure alongside potential benefits.
Dan Burgin
Vladislav Sopov