Binance Will Soon Reward Market Makers for Providing Futures Liquidity

Cryptocurrency exchange Binance is adjusting its fee structure to get market makers to add liquidity on its futures platform.

Under the revised Binance Futures Market Maker Program, market makers will receive a negative fee for selected trading pairs, according to an official announcement on Monday.

A "Market maker" is a user who adds liquidity, or buying and selling limit orders in which the limit price is below/above the current market price, by placing a trade in the order book.

A "Market taker" is the one who takes liquidity off the market by filling a trade already placed.

Binance has upped the ante by announcing what's effectively a reward for placing market-making trades on "Select" pairs.

To join the program, market makers must have 30-day trading volumes in excess of 1,000 BTC on Binance, and have "Quality market maker strategies," the post says.

A weekly performance review will be imposed, based on metrics like market volumes, market-making time, bid/offer spread, total order size and order duration.

In January, Binance futures volume witnessed an 85 percent month-on-month increase, with $56 billion traded across its perpetual contract markets.

Perpetuals are no-expiry contracts that mimic a margin-based spot market and trade close to the underlying reference price.

In December, BitMEX and Binance accounted for the majority of the BTC perpetual futures market volume at $1.7 billion and $947 million per day, respectively, on average.