How do exchanges maintain liquidity for large trades?
Exchanges rely on liquidity providers and automated market makers to ensure sufficient order book depth. Incentives like trading fee rebates encourage participants to supply liquidity. High liquidity ensures that even large trades can be executed without major price impact. Exchanges monitor order flow and adjust funding rates to maintain balance. Secondary markets for perpetual contracts also contribute to liquidity. Together, these mechanisms ensure smooth trading and minimal slippage, even during volatile market conditions.
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