How does mmi cost affect the trading volume of cryptocurrencies?

3 answers

• Mar 18, 2022 · 3 years ago
  The cost of market making (mmi cost) plays a significant role in determining the trading volume of cryptocurrencies. When the mmi cost is low, it incentivizes market makers to provide liquidity, leading to increased trading activity. On the other hand, high mmi cost may discourage market makers, resulting in lower trading volume. Therefore, there is a direct correlation between mmi cost and trading volume in the cryptocurrency market.
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• Mar 18, 2022 · 3 years ago
  The impact of mmi cost on trading volume can be explained by the concept of bid-ask spread. Market makers profit from the bid-ask spread, which is the difference between the buying price and selling price of a cryptocurrency. When the mmi cost is low, market makers can offer narrower spreads, attracting more traders and increasing trading volume. Conversely, high mmi cost leads to wider spreads, which can deter traders and reduce trading volume.
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• Mar 18, 2022 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, has observed that mmi cost has a significant influence on trading volume. As the mmi cost decreases, the trading volume tends to increase. This is because lower mmi cost attracts more market makers, resulting in improved liquidity and higher trading activity. Therefore, it is crucial for cryptocurrency exchanges to optimize their mmi cost to stimulate trading volume and enhance market efficiency.
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