This is the first in a series of articles aimed at providing a genuine resource for project founders and core teams entering into the world of market making. Since launching our Market-Making-as-a-Service (MMaaS), we’ve heard a steady stream of stories from token project founders about their experiences in this space. What follows are some anonymised, abridged snippets from those conversations—real voices from the trenches. Their experiences reveal the complexities and risks inherent in partnering with market makers, highlighting the need for informed decision-making and transparency.
Introduction: Market Making in Crypto
Let’s talk about market-making. It’s one of those things that’s supposed to make your life easier. It is vital to all financial markets, and crypto is no exception. Market making is the liquidity engine that keeps things moving, ensuring there’s always a buyer and seller for your token, stabilising prices, and keeping volatility at bay. For token projects, market makers are the bridge to centralised exchanges, helping tokens gain traction and become more accessible to the public. Done right, market-making makes everyone happy.
But there’s a reason crypto media is littered with stories about market makers gone rogue—price manipulation, volume spoofing, and token dumping onto unsuspecting communities and retail investors. Founders end up in a classic catch-22: they know they need market-makers to list on a CEX, but as one founder told us,
“It’s kind of like a black box, right…we don’t even know what’s good or bad.”
For founders, trying to understand market-making can feel like being thrown into the deep end. It’s all too easy to pick a partner that looks trustworthy, only to find out later you’re locked into a one-sided game.
A lot of founders, to put it bluntly, don’t fully understand the deal structures that underpin market-making services—nor should they necessarily be expected to. They’re provided with options, loans, and other financing mechanisms that can seem needlessly complex, often with little explanation. Founders are rarely shown the full scope: how these options might be traded, the risks they introduce, or even the implications on long-term costs.
To make things tougher, the onus of monitoring market maker performance often falls right back onto the project, even though the tools to do so are rarely provided. Most founders are left managing KPIs and trading activity with only vague metrics, limited oversight, and no clear way to independently verify that the market maker is delivering what was promised. This lack of transparency in deal structure leaves founders vulnerable to misalignment and unmet expectations.
The charges raised by regulatory bodies such as the SEC against so-called “market makers” complicates matters further. A project that partners with market makers who indulge in questionable practice can damage its reputation, making it seem shady by association.
The Complexity and Commitment of Building a Project
Building a token project from the ground up takes a lot of graft, with multiple months or even years of planning and development. Founders and core teams often handle every detail, from the smart contract development to brand identity creation, getting into the guts of the marketing strategy, partnerships, and community building. One founder shared:
“We invested so much time and energy, only to have the market maker push us way above the strike price very quickly, then sell into retail.”
This kind of manipulation can destabilise the token’s market presence and undermine the community trust founders work hard to build.
A recent Messari report highlights the damage of these “pump and dump” tactics, which can leave tokens in free fall after an artificial spike. For founders, watching the product of their hard work unravel at the hands of someone they thought was on their side is devastating.
Loss of Control and Community Responsibility
Crypto projects are inherently public, with founders’ actions on full display to their communities. This transparency adds a layer of responsibility towards early investors and supporters who believe in the project’s vision. Founders want their communities to benefit from a successful project, not to be harmed in the wake of questionable market-making activities based on a partnership decision they made. One founder expressed this uncertainty, saying:
“We need to take on a market maker, but we don’t even know…do we trust them, or not?”
The issue is misaligned incentives. Some market makers prioritise short-term profits over the project’s long-term goals, and when they behave in this way, it’s the community that pays the price. This misalignment only increases the risk for founders, who are left to shoulder the fallout.
Performance Metrics and the Struggle for Control
Setting and monitoring performance metrics—or KPIs—should be a straightforward part of managing a market maker. In traditional finance, there are clear metrics for liquidity volume, bid-ask spreads, and trading turnover. One founder said:
“I’m struggling to understand how to set KPIs for the market maker.”
This lack of clarity leaves founders with few options if things go wrong. The absence of standardisation makes it easy for market makers to operate with minimal accountability, leaving founders in the dark about whether their market maker is actually adding value or meeting their contractual obligations.
On top of this, founders are often forced to shoulder the burden of tracking performance, with market makers rarely providing the right tools to independently verify their activity or results. A project team should be able to focus the majority of their time on building, not monitoring their market maker—and, when they do want to check, it should be straightforward to confirm that their MM is performing in line with the agreed KPIs. Instead, many founders find themselves relying on vague metrics, without a clear path to accountability if things fall short.
Legal Risks and Breaches of Contract
Founders often navigate complex contracts, and unfortunately, breaches of contract are common. Lexology points out that enforcing contracts in the crypto space is particularly difficult due to inconsistent regulations and cross-jurisdictional issues. One project founder we spoke to shared their frustration. The contract had been written in such a way that the burden of proving any lack of adherence fell entirely on the project, making it an uphill battle to get clarity or accountability. Despite the challenges, this founder managed to uncover evidence, sharing:
“It was very easy to prove that they weren’t adhering to [the agreements]…that prompted us to go back and speak to [the market maker], who admitted they hadn’t been doing this for months.”
But for most projects, lacking the necessary knowledge, skills, or data, this level of oversight isn’t feasible. Non-compliance leaves a mess: liquidity dries up, spreads widen, and the token’s value tanks, all while founders are left with limited legal recourse available.
Conclusion: A Call for Greater Transparency and Education
The risks of market-making in crypto underscore the need for transparency, education, and goal alignment between projects and market makers. Every partnership carries risks, and founders pour their lives into these projects, building communities, earning trust, and working toward long-term success. But without clear guidance and accountability, they risk partnering with market makers who are more interested in quick profits than in supporting the project’s growth.
To mitigate these risks, founders need to find transparent market makers, insist on rock-solid contracts, and set KPIs that actually reflect the project’s growth goals. One founder summed it up perfectly:
“We got taught a lesson in financial markets…when someone offers you something for free, look for the catch.”
This wisdom highlights the need for vigilance, education, and trust as founders strive to ensure their project’s success without compromising its integrity.
Hopefully, this article shed some light on the risks and complexities of market making for crypto projects. Next up in our series is a handy checklist—a practical guide designed to help you make sound decisions and establish a successful market-making partnership, and something you can refer to whilst going through the process. If you don't already, follow us on X to keep tabs as this series progresses.
