I have a question about the workings of a maker-market. This works for basically any product, but the example is quite nice for cryptocurrencies (due to their high volatility).

Consider a (fictitious) exchange abitofacoin.com. Suppose there is a sell order offering 1 coin for £1000, and a second sell order offering 1 coin for £1200. Suppose I want to buy 2 coins.

  • Were I to place a single buy order for one coin at £1000 and then another for one coin at £1200, these would go through: I'd end up with 2 coins at a cost of £2200.
  • Instead suppose that I place a single buy order for 2 coins at £1200 (per coin): I'd end up with 2 coins, but would I be charged £2400 (ie £1200 to both) or would I be charged £2200 (ie £1000 to the first and £1200 to the second)?

I have the same question for reversing the rolls. Suppose I have some coin to sell. If there is a buy order for £800 and for £1000, if I offer two coins for £800 would one sell for £1000 and then next for £800 or would the person saying they'd buy for £1000 only have to pay £800?

I suppose one reason why they may do the case that's worse for me in the above methods is to try to incentivise being a maker rather than a taker.


Once an order is on the books, it can only execute at the rate at which it was placed. So once an offer to buy 1 coin at £1000 is placed, whoever takes it -- however they take it -- is going to pay £1000 if they buy 1 coin.

While an offer is being placed, it can cross with offers in the other direction if the rate is equal to, or better for the placer than, the rate of the offer being placed. Better offers are always taken first to reward those who placed the best offers.

If the offer doesn't fully cross existing offers, the remainder is placed on the books at the chosen rate. The only difference between a buy and a sell is the amount of the offer placed at the end.

For example, if I place an offer to buy 2 coins for £1000 and am able to buy 1 coin for £400 when crossing existing offers, the remainder of my offer would be placed as 1 coin for £500. If that is fully taken, I'll wind up buying my 2 coins for £900, that is, buying what I asked to buy, but paying less.

If I place an offer to sell £1000 for 2 coins and am able to sell £400 for 1 coin when crossing existing offers, the remainder would be placed as £600 for 1.2 coins. If that is fully taken, I'll wind up selling my £1000, but getting 2.2 coins for it, that is, I sell what I asked to, but get more.

  • Thank you, I think I'm understanding. Basically, if I place an order on the books that isn't immediately filled ('maker'), assuming that at some point it's filled, then I'll get exactly what I asked for. On the other hand, if I place an order which is filled immediately ('taker'), then I may do better: I may pay less or get more coin. If I were to place an order sell 2 coin for £1000, and there were orders buy 1 coin for £600 and buy 1 coin for £500, then it would get executed, and I'd end up with £1100. Is this correct?
    – Sam OT
    Jan 23 '18 at 8:04
  • Yes, that's correct. Jan 23 '18 at 18:22

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