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AFAIK Coinbase Pro isn’t a market maker, it’s a marketplace. a market maker would be someone who offers to buy/sell some asset for a specific price. for example

AFAIK Coinbase Pro isn’t a market maker, it’s a marketplace. a market maker would be someone who offers to buy/sell some asset for a specific price. for example when i use Coinbase Pro to place an offer to buy 1 Bitcoin for $55000, i’m acting as a market maker. all the same, i agree with you: it’s already cheaper to use Coinbase Pro as an on-ramp to obtain USDC and then trade the USDC on a decentralized exchange that charges 1/5th the fees as Coinbase Pro. that wasn’t the case 2 years ago, and i don’t see any compelling reason to believe that Coinbase the company won’t continue to lose its mote, over the long term, in an industry which is fundamentally about decentralization.

xiphias2 5y ago
You’re right, I used the wrong word.
thaumasiotes 5y ago
> for example when i use Coinbase Pro to place an offer to buy 1 Bitcoin for $55000, i’m acting as a market maker. My understanding is different. When you place an order, you're absorbing liquidity from the marketplace. A market maker is the party that generates liquidity by fulfilling orders, not the party that destroys it by placing them.
- CallMeJim 5y ago
  No, a market maker makes (adds to) the market by placing orders. A market taker takes orders away from the market by completing transactions, thinning the order books.
  - thaumasiotes 5y ago
    From wikipedia: > A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the bid–ask spread, or turn.[1] The function of a market maker is to help limit price variation (volatility) by setting a limited trading price range for the assets being traded. > In U.S. markets, the U.S. Securities and Exchange Commission defines a "market maker" as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price. The concept of the market maker is that, if you as a third party want to buy or sell whatever it is, you can do that because the market maker will instantly fill your order. ("Liquidity provider".) Without the market maker, your buy/sell order would have to wait around indefinitely for someone else to file a matching sell/buy order. In particular, note that placing a buy order without a corresponding sell order doesn't satisfy any definition of market making. And if it did, limiting the order to 1 bitcoin would still be disqualifying; to fill the role of liquidity provider, the market maker must stand ready to buy as many bitcoins as anyone wants to sell.

xiphias2 5y ago

You’re right, I used the wrong word.

thaumasiotes 5y ago

> for example when i use Coinbase Pro to place an offer to buy 1 Bitcoin for $55000, i’m acting as a market maker. My understanding is different. When you place an order, you're absorbing liquidity from the marketplace. A market maker is the party that generates liquidity by fulfilling orders, not the party that destroys it by placing them.

CallMeJim 5y ago
No, a market maker makes (adds to) the market by placing orders. A market taker takes orders away from the market by completing transactions, thinning the order books.
- thaumasiotes 5y ago
  From wikipedia: > A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the bid–ask spread, or turn.[1] The function of a market maker is to help limit price variation (volatility) by setting a limited trading price range for the assets being traded. > In U.S. markets, the U.S. Securities and Exchange Commission defines a "market maker" as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price. The concept of the market maker is that, if you as a third party want to buy or sell whatever it is, you can do that because the market maker will instantly fill your order. ("Liquidity provider".) Without the market maker, your buy/sell order would have to wait around indefinitely for someone else to file a matching sell/buy order. In particular, note that placing a buy order without a corresponding sell order doesn't satisfy any definition of market making. And if it did, limiting the order to 1 bitcoin would still be disqualifying; to fill the role of liquidity provider, the market maker must stand ready to buy as many bitcoins as anyone wants to sell.