Market Making Bot

Build a simple market making bot for Drift

This example demonstrates a basic market making strategy that quotes bid/ask orders around the oracle price.

Complete Example

market-maker.ts

import {
  DriftClient,
  User,
  BulkAccountLoader,
  getLimitOrderParams,
  PositionDirection,
  PostOnlyParams,
  calculateBidAskPrice,
  convertToNumber,
  BASE_PRECISION,
  PRICE_PRECISION,
  QUOTE_PRECISION,
  BN,
} from '@drift-labs/sdk';

class SimpleMarketMaker {
  private driftClient: DriftClient;
  private user: User;
  private marketIndex: number;
  private spreadBps: number; // Spread in basis points
  private orderSize: BN;
  
  constructor(
    driftClient: DriftClient,
    user: User,
    marketIndex: number,
    spreadBps: number = 10, // 0.1%
    orderSize: number = 1 // 1 SOL
  ) {
    this.driftClient = driftClient;
    this.user = user;
    this.marketIndex = marketIndex;
    this.spreadBps = spreadBps;
    this.orderSize = new BN(orderSize).mul(BASE_PRECISION);
  }

  async run() {
    console.log('Market maker starting...');
    
    // Update quotes every 5 seconds
    setInterval(async () => {
      try {
        await this.updateQuotes();
      } catch (error) {
        console.error('Error updating quotes:', error);
      }
    }, 5000);
  }

  async updateQuotes() {
    // Get current market data
    const perpMarket = this.driftClient.getPerpMarketAccount(this.marketIndex);
    const oracleData = this.driftClient.getOracleDataForPerpMarket(this.marketIndex);
    const oraclePrice = oracleData.price;

    // Calculate bid/ask around oracle price
    const spreadAmount = oraclePrice
      .mul(new BN(this.spreadBps))
      .div(new BN(10000));
    
    const bidPrice = oraclePrice.sub(spreadAmount);
    const askPrice = oraclePrice.add(spreadAmount);

    console.log('\nUpdating quotes:');
    console.log('  Oracle:', convertToNumber(oraclePrice, PRICE_PRECISION));
    console.log('  Bid:', convertToNumber(bidPrice, PRICE_PRECISION));
    console.log('  Ask:', convertToNumber(askPrice, PRICE_PRECISION));

    // Cancel existing orders
    await this.driftClient.cancelOrders(
      MarketType.PERP,
      this.marketIndex
    );

    // Place new bid
    const bidOrder = getLimitOrderParams({
      marketIndex: this.marketIndex,
      direction: PositionDirection.LONG,
      baseAssetAmount: this.orderSize,
      price: bidPrice,
      postOnly: PostOnlyParams.MUST_POST_ONLY,
    });

    // Place new ask
    const askOrder = getLimitOrderParams({
      marketIndex: this.marketIndex,
      direction: PositionDirection.SHORT,
      baseAssetAmount: this.orderSize,
      price: askPrice,
      postOnly: PostOnlyParams.MUST_POST_ONLY,
    });

    // Place both orders
    await this.driftClient.placeOrders([bidOrder, askOrder]);
    console.log('  Orders placed');

    // Check inventory
    await this.checkInventory();
  }

  async checkInventory() {
    const position = this.user.getPerpPosition(this.marketIndex);
    
    if (position) {
      const size = convertToNumber(position.baseAssetAmount, BASE_PRECISION);
      console.log('  Position size:', size);
      
      // Adjust quotes if inventory gets too large
      if (Math.abs(size) > 10) {
        console.warn('  ⚠️ Large inventory - consider adjusting');
      }
    }
  }
}

// Run the market maker
async function main() {
  // Initialize DriftClient and User (see guides/initialization for setup)
  const driftClient = /* initialize your DriftClient */ ;
  const user = /* initialize your User */ ;

  // Create market maker for SOL-PERP
  const marketMaker = new SimpleMarketMaker(
    driftClient,
    user,
    0, // SOL-PERP market index
    10, // 0.1% spread
    1 // 1 SOL per order
  );

  // Start market making
  await marketMaker.run();
}

main().catch(console.error);

Key Concepts

Post-only orders

Use PostOnlyParams.MUST_POST_ONLY to ensure you always provide liquidity and earn maker fees.

Inventory management

Monitor position size and adjust quotes or hedge when inventory gets too large.

Quote updates

Update quotes frequently to stay competitive and adjust to market conditions.

Risk management

Set position limits and stop-losses to manage risk.

Advanced Features

Dynamic Spreads

// Adjust spread based on volatility
const volatility = calculateVolatility(recentPrices);
const dynamicSpread = baseSpread * (1 + volatility);

Inventory Skewing

// Skew quotes based on inventory
const inventorySkew = position.baseAssetAmount
  .mul(new BN(5))
  .div(new BN(1000));

const bidPrice = oraclePrice.sub(spreadAmount).sub(inventorySkew);
const askPrice = oraclePrice.add(spreadAmount).sub(inventorySkew);

Production Considerations

• Error handling: Robust retry logic
• Monitoring: Track fills, PnL, and position
• Risk limits: Maximum position size
• Multiple markets: Diversify across markets
• Gas optimization: Batch operations

For production market making, see keeper-bots-v2 for reference implementations.

Next Steps

Liquidation Bot

Build a liquidation bot

Advanced Features

Advanced SDK features