Crypto exchange Binance has announced a market maker service designed to encourage big spenders to increase the amount of crypto running through its network.
The Binance Market Maker Program offers reduced trading fees and higher API limits to traders whose volumes surpass 1,000 Bitcoin a month ($7,880,400) and who have “quality market maker strategies”.
The hope is that whales use Binance to trade cryptocurrencies, which in turn, would hopefully encourage other traders to follow suit. As more money flows through the exchange, and the liquidity of the exchange rises, it makes it easier for small traders to fulfill orders.
Documents Binance showed to Decrypt show that 16 coins are included in the program, including Dash, Bitcoin, and Ethereum. All pairings are for USDT (Tether), apart from Bitcoin, which is paired with BUSD.
A market maker’s score is calculated by their performance on various pairings on the “Market Maker Pair List”, a specially curated list based on the spot markets on Binance.com. Some coins are ranked higher than others. The EOS/USDT and XRP/USDT pairings are given a weight of 0.5, DASH/USDT and XMR/USDT are given a weight of 3, ZEC/UDST is given a weight of 7, and IOST/USDT is given a weight of 10.
The final market maker score is comprised of other factors, like volume and total order size, multiplied by the pair weighting.
Budding applicants must email Binance with proof of market volumes, including those on other exchanges. Binance is offering a trial period of 2-3 weeks to new participants, who will pay no trading fees for the pairs outlined.
The announcement comes a few weeks after Binance CEO Changpeng Zhao accidentally shamed a market maker, whom he believed was trying to manipulate Binance’s new futures exchange after futures prices briefly dipped in price. Zhao thought the market maker manipulated the market to buy crypto at low prices, then sell when they went back up. Zhao was wrong, however; Zhao later found out that the price blip was an accident, “due to a bad parameter on their side...the attacker lost a bunch of money, and that was that,” he tweeted.