# Market Making
Start with [Developers](/getting-started/developers.md) for an overview of programmatic trading on World.
World has natural taker flow through aggregators and integrated retail apps, which MMs can tap into if the quoting is sufficiently tight.
## Perps & Spot: Hedging
Market makers on World should aim to quote all listed perps and spot markets. The risk engine is designed to maximize capital efficiency, which maximizes the expected value of quoting an additional market.
For example:
1. Assume starting balance is $1M [Denomination: USDM](/venue/denomination-usdm.md).
2. Your BUY maker order in the spot market is filled for 1 ETH. Your [Available Margin & Collateral](/essentials/available-margin-and-collateral.md) will go down slightly because you have increased your market exposure.
1. NOTE - your ETH still counts as collateral, it is just worth less than the equivalent value in [Denomination: USDM](/venue/denomination-usdm.md) because of the associated market risk.
3. Let's say upon fill, you immediately place an order in the perps market to SHORT 1 ETH and get filled. Now, you are market neutral, and your [Available Margin & Collateral](/essentials/available-margin-and-collateral.md) will increase back to nearly full, allowing you to quote more size.
## Spot Market Making
Spot market making tends to start with borrowing the spot asset from the lending market. Almost all (if not all) market makers for Spot are using leverage.
For example:
1. Assume starting balance is $1M [Denomination: USDM](/venue/denomination-usdm.md).
2. You borrow 2,000 ETH from the ETH loan market. Let's say the market rate to borrow ETH is 3%. All loans have 10 day durations, which means you will owe the lender 2000 x 3% x (10/365) = 1.64 ETH in 10 days (equivalently, 60 ETH annualized).
Borrowing ETH looks like this; the Spot ETH is the asset and the Borrow ETH is the liability. Borrowing does not introduce market exposure.
3. You don't want any market exposure to ETH, so you decide to long 1.64 ETH Perps.
4. You also borrow another $4M USDM, so that you have roughly the same value of USDM and ETH to quote with.
5. Now, you quote $4M USDM total notional of ETH Spot BUY orders and 2,000 ETH total notional of ETH SELL orders, and you have $1M USDM remaining which cannot get filled because you decided to only quote with the $4M USDM you borrowed.
6. An ETH Spot Buy order gets filled. Read [#perps-and-spot](#perps-and-spot "mention") for a good way to hedge.
Observe that you can borrow any Spot asset which has a lending market, and borrow many Spot assets at the same time. Your only limitation is your Available Margin, which is only materially affected by the interest rates you owe on the loans and any orders that get filled and introduce market exposure (that is until you hedge it).
Read more about borrowing: [Lending](/details/lending.md#borrowing). One of the most common mistakes is forgetting or failing to pay interest rates on loans; this can trigger liquidation in adverse market environments.
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