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Market Makers

Exchanges often calculate the market value of an asset with an order book. This is where it collects all the offers to buy and to sell from its users. You might submit an instruction that looks like the following: Buy 800 BTC at $4,000, for example. This is added to the order book, and it will be filled when the price reaches $4,000.

Maker (Post Only) Order like the one described requires that you announce your intentions ahead of time by adding them to the order book. You’re a maker because you’ve “made” the market, in a sense. The exchange is like a grocery store that charges a fee to individuals to put goods on the shelves, and you’re the person adding your own inventory.

It’s common for big traders and institutions (like those specializing in high-frequency trading) to take on the role of market makers. Alternatively, small traders can become makers, simply by placing certain order types that aren’t executed immediately.

Please note that using a limit order does not guarantee that your order will be a maker order. If you want to make sure the order goes into the order book before it is filled, please select “Post only” when placing your order (currently only available on the web version and desk version).

Market Takers

If we keep the store analogy going, then surely you’re putting your inventory on the shelves for someone to come and purchase it. That someone is the taker. Instead of taking tins of beans from the store, though, they’re eating into the liquidity you provide.

Think about it: by placing an offer on the order book, you increase the liquidity of the exchange because you make it easier for users to buy or sell. On the other hand, a taker removes part of that liquidity. with a market order – an instruction to buy or sell at the current market price. When they do this, existing orders on the order book are filled immediately.

If you’ve ever placed a market order on Binance or another cryptocurrency exchange to trade, say then you’ve acted as a taker. But note that you can also be a taker using limit orders. The thing is: you are a taker whenever you fill someone else's order.

Educational Post
A bond is a debt security, similar to an IOU. When you purchase a bond, you are essentially lending money to the issuer, which could be a government, municipality, or corporation. In return for your loan, the issuer agrees to pay you interest (referred to as the coupon) at regular intervals and to return the principal amount (face value) when the bond matures.

Types of bonds
1. Government bonds: Issued by national governments. Examples include US Treasury bonds, UK Gilts, and German Bunds.
2. Municipal bonds: Issued by local governments or municipalities to fund public projects like schools and highways.
3. Corporate bonds: Issued by companies to raise capital for expansion, operations, or other business activities.
4. Savings bonds: Typically low-denomination bonds issued by governments for small investors.

How Do Bonds Work?
Issuance and pricing
When bonds are issued, they have a face value, a coupon rate, and a maturity date. The face value is the amount the bond will be worth at maturity, and the coupon rate is the interest rate the issuer will pay the bondholder. Bonds are sold in the primary market when they are first issued and then traded in the secondary market.
The primary market is where investors purchase bonds directly from the issuer, such as a government or corporation. After the initial sale, bonds can be traded among investors in the secondary market, where prices fluctuate based on factors like interest rates, economic conditions, and the issuer's creditworthiness. The secondary market provides liquidity, enabling investors to buy and sell bonds before they mature.

Interest payments
Bondholders receive interest payments at regular intervals, typically semi-annually or annually. These payments are a fixed percentage of the bond's face value. For example, a bond with a face value of $1,000 and a coupon rate of 5% will pay $50 per year. An example of this is a US Treasury bond with a 10-year maturity and a coupon rate of 2%, which would pay $20 annually on a $1,000 bond.

Maturity
The maturity date is when the bond issuer must repay the bond's face value to the bondholder. Bonds can have short-term maturities (less than 3 years), medium-term maturities (3-10 years), or long-term maturities (more than 10 years).
For instance, a short-term corporate bond issued by Apple might mature in 2 years, while a medium-term municipal bond from the city of Los Angeles could have a 7-year maturity. Long-term bonds, such as a 30-year US Treasury bond, mature after three decades.
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Educational Post
A burner wallet is a temporary crypto wallet that users create for potentially risky interactions with various blockchain applications. Burner wallets are not meant for storing large amounts of crypto but should contain just enough for a single or a few interactions.

How Do Burner Wallets Work?
Burner wallets can be created using hierarchical deterministic (HD) wallets, which can generate numerous accounts from a single secret seed phrase. Every account within an HD wallet has its own private key but is managed under the same seed phrase.
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To use a burner wallet, you can generate a new account specifically for working with potentially risky blockchain applications or smart contracts. The key is to reduce risks by keeping your primary wallet and funds separate from these activities. For example, you could create a burner wallet when participating in new airdrops or when interacting with a new smart contract that was not audited.
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By segregating your assets into different types of accounts, such as a primary account for storing most of your assets and a separate burner account for risky interactions, you ensure that even if a burner wallet is compromised, your main wallet and most of your crypto stored on it remain secure.

Benefits of Burner Wallets

Safe browsing
Users often explore new blockchain platforms, but they tend to have vulnerabilities or scam projects. Using a burner wallet when engaging with these new applications is crucial to ensure that even if a platform is malicious or compromised, most of your crypto assets remain secure.

Protection against malicious smart contracts
By using a burner wallet to interact with smart contracts, you can isolate the potential risks to a separate disposable account. This safeguards your main wallet from being drained in case of faulty smart contracts.
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Conclusion
Burner wallets are temporary cryptocurrency wallets that users can use to mitigate the potential risks related to interactions with various blockchain applications. Burner wallets offer benefits in the form of protection against potentially malicious smart contracts and an ability to safely engage with new and untested blockchain applications.

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