Market Making in traditional finance: 

• Most exchanges maintain an order book and facilitate matches between buyers and sellers. 
• For each successful match, traders are charged exchange fees which go directly to exchange operators.

The DeFi Difference:

• Smart contracts hold liquidity reserves of various tokens, and trades are executed directly against these reserves. 
• Prices are set automatically using the constant product market maker mechanism, which keeps overall reserves in relative equilibrium. 
• Reserves are pooled between a network of liquidity providers who supply the system with tokens and receive a proportional share of transaction fees accrued.