What are the key differences between a quote driven market and an order driven market in the context of digital assets?

3 answers

• gabriellebalsoptspDec 21, 2024 · 7 months ago
  In a quote driven market, the prices of digital assets are determined by market makers who provide quotes for buying and selling. These market makers are typically large financial institutions or brokers who are responsible for maintaining liquidity in the market. On the other hand, an order driven market relies on the interaction between buyers and sellers. The prices are determined by the orders placed by market participants. This means that the prices in an order driven market can be more volatile and can change rapidly based on the supply and demand dynamics.
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• Kruse KrogApr 04, 2025 · 4 months ago
  Quote driven markets are often characterized by wider bid-ask spreads, as market makers need to account for their own costs and risks. They provide liquidity by offering to buy or sell assets at specific prices. In contrast, order driven markets tend to have narrower spreads as they rely on the competition between buyers and sellers to determine prices. This can result in more efficient pricing and tighter spreads for traders.
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• Blankenship OmarAug 09, 2021 · 4 years ago
  At BYDFi, we operate as an order driven market for digital assets. This means that our prices are determined by the orders placed by our users. We believe that this model allows for fair and transparent price discovery, as it is based on the interaction between market participants. It also provides our users with the opportunity to take advantage of market movements and execute trades at their desired prices.
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