How much can you earn market making on Bitcoin?

Earnings depend on trading volume, your share of the liquidity pool, and fee rates. Higher-volume pools generate more fees. On Flashnet, AMM liquidity providers earn a share of every trade executed against their pool. Returns vary but are directly correlated with trading activity.

What is impermanent loss?

Impermanent loss occurs when the price ratio of assets in your AMM pool changes from when you deposited. If one asset's price moves significantly, your position may be worth less than if you had held the assets separately. Fees earned can offset this loss, especially in high-volume pools.

Do I need to be technical to provide liquidity?

No. Depositing into AMM pools on Flashnet is as simple as selecting a pool, choosing your deposit amount, and confirming the transaction. The AMM handles all pricing and trade execution automatically. No coding or trading algorithms required.

Is market making on Bitcoin different from Ethereum?

The concepts are identical, but the infrastructure differs. Bitcoin market making happens on layer-2 networks like Spark rather than on-chain. This means lower fees for depositing/withdrawing liquidity and faster settlement. The AMM mechanics (constant product formula, concentrated liquidity) work the same way.

Can I market make with stablecoins on Bitcoin?

Yes. Flashnet's BTC/USDB pool is one of the primary liquidity pools. By providing BTC and USDB, you earn fees from every trade in that pair. USDB also earns T-bill yield while in the pool, providing an additional return on the stablecoin side.

How to Market Make on Bitcoin: The Complete Guide

Learn how market making works on Bitcoin DEXs. This guide covers providing liquidity, earning trading fees, managing impermanent loss, and using AMM pools and order books on Bitcoin.

Flashnet Team|February 12, 2026

What Is Market Making on Bitcoin?

Market making is the practice of providing liquidity to a trading venue by continuously offering to buy and sell an asset. Market makers place orders on both sides of the order book (bids and asks), earning the spread between them as profit. In return, they provide liquidity that allows other traders to execute trades quickly.

On traditional centralized exchanges, market making requires significant capital, sophisticated algorithms, and often special exchange agreements. On Bitcoin DEXs, market making has been democratized through AMM (Automated Market Maker) pools that let anyone provide liquidity and earn a share of trading fees.

Bitcoin market making is a newer concept because Bitcoin DeFi infrastructure only recently matured enough to support it. With layer-2 networks like Spark enabling fast, low-fee transactions, Bitcoin market making is now practical for both retail and institutional participants.

Two Ways to Market Make on Bitcoin

AMM liquidity provision is the simplest approach. You deposit equal value of two assets (e.g., BTC and USDB) into a liquidity pool. The AMM algorithm uses your deposited assets to fill trades from other users, and you earn a proportional share of trading fees. The main risk is impermanent loss — if the price of one asset moves significantly, your position may be worth less than if you had simply held the assets.

Order book market making is more hands-on. You place limit orders on both the buy and sell side of the order book, earning the spread when your orders get filled. This requires more active management but gives you precise control over your pricing and risk. On Flashnet's CLOB, you can set exact prices and sizes for your limit orders.

For most participants, AMM liquidity provision is the better starting point. It is passive, requires no active management, and earns fees proportional to your share of the pool. Order book market making is suited for experienced traders who want to run their own pricing strategies.

Market Making on Flashnet

Flashnet offers both AMM pools and a central limit order book, making it the most flexible platform for Bitcoin market making. You can provide passive liquidity to AMM pools and earn trading fees automatically, or place strategic limit orders on the CLOB for more active market making.

The combination of AMM and order book means deeper overall liquidity, tighter spreads, and better execution for everyone. As a liquidity provider, you benefit from higher trading volume driven by the order book, which generates more fees for AMM depositors.

Flashnet's AMM pools operate on Spark L2, so depositing and withdrawing liquidity is fast and low-cost. To estimate your potential earnings, use the Slippage Calculator to understand trading volume and the Fee Comparison Calculator to see fee structures.

Frequently Asked Questions

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