Binance to reward market makers for providing liquidity

Binance announced that they have revised their futures market maker program fee structure to include negative fees for select trading pairs. Other benefits for qualifying market makers include higher API limits and ultra-low latency connectivity and support. In order to qualify, market maker's 30-day volumes must exceed 1,000 BTC, although it does not need to exclusively be on Binance.

Why it matters

• In the exchange business liquidity is king. Traders will naturally flow to whichever provides the most liquid markets as it enables them to trade in and out of their positions with minimal slippage. This creates a race for exchanges to get more liquidity since it creates a virtuous cycle. One way to ensure liquid markets is to simply pay those who are providing liquidity which is what negative fees amount to. We see this playing out not only in the centralized exchange business but decentralized ones too as 0x recently upgraded to provide more liquidity incentives and Kyber will be following suit.
• Derivatives are becoming an increasingly large portion of the crypto market. Binance has traded $1.42 billion in volume compared to the spot markets which show real volume of $800 million. Despite being almost twice as large as the spot markets, Binance is only the fourth largest bitcoin futures market.

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