TL;DR: A crypto market maker keeps buy and sell orders on your token's order books after listing, so traders can enter and exit without moving the price too far. Founders usually choose between a retainer (you pay a fee, the market maker trades with its own or your inventory) and a token loan with call options (you lend tokens, the market maker can buy them later at set prices). The option model costs less cash upfront, but it can add sell pressure when options are in the money. Put measurable KPIs in the contract (maximum spread, depth within a price band, uptime, reporting), reject anyone who promises price or volume targets, and line the deal up with your vesting schedule and DEX liquidity pool.
Your IDO raised the money, the token is live, and now the chart is someone else's problem. Except it isn't. The first weeks after listing decide whether early buyers can trade your token at fair prices, and for most centralized exchange pairs that depends on one counterparty: your crypto market maker.
This guide is for founders preparing a launch. We cover what a market maker actually does after listing, how the two common deal structures work, which numbers belong in the contract, and the red flags US regulators have already charged people for. We do not recommend any specific firm, and nothing here guarantees a price outcome.
If you want the investor-side view first, we explain how thin post-listing liquidity traps buyers in the truth about IDO ROI and the exit trap, and we break down why so many tokens slide after TGE in our post-mortem on why IDOs fail after listing. This article stays on the founder's side of the table: the market-maker deal itself.
What Does a Crypto Market Maker Do After Listing?
A market maker quotes both sides of the order book at the same time: a bid (the price it will buy at) and an ask (the price it will sell at). GSR, one of the larger crypto trading firms, describes the role in its guide to market making for crypto startups as acting as "a buyer and seller of last resort" and says a market maker "does nothing more and nothing less than facilitating tight markets by posting tighter spreads."
For a newly listed token, that work breaks down into three measurable things:
- Spread: the gap between the best bid and best ask, usually expressed as a percentage of the mid price. A wide spread means every trader pays a hidden cost just to get in or out.
- Depth: how much value sits on the order book within a band around the mid price (for example, within plus or minus 2%). Depth tells you how big a trade the market can absorb before the price moves meaningfully.
- Uptime: the share of time the market maker actually keeps its quotes live. Quotes that vanish during volatility are worth very little, because that is exactly when holders need to trade.
Keyrock's market-making page frames the same checklist from the provider side: a reliable market maker "should be able to maintain tight spreads, consistent uptime, and stable liquidity during periods of high volatility and token launch activity," and projects should assess "transparency, incentive alignment, reporting." Wintermute's liquidity page similarly lists 24/7 liquidity provision and transparent liquidity reporting as part of its offer. Those statements are marketing copy, but they are useful because they tell you which promises you can hold a provider to in writing.
What a legitimate market maker does not do: set your price, defend a price floor indefinitely, or create trading volume for appearance's sake. Liquidity reduces friction. It does not replace demand.
KEY TAKEAWAYS
- A market maker's job is measurable: spread, depth near the mid price, and uptime.
- Legitimate providers describe their service in those terms, not in price targets.
- Liquidity makes trading cheaper; it cannot create lasting demand for a token.
The Two Common Market Maker Deal Structures
Terms vary by firm and are rarely published, so treat the descriptions below as the general shape of the market, not a quote from any single provider.
1. Retainer (fee) model
The project pays a monthly fee. The project usually also supplies, or the market maker funds, the inventory of tokens and stablecoins used to quote on each venue. The market maker is paid for a service, and the inventory either stays the project's property or is returned at the end of the term.
- Pros: incentives are simple. The market maker earns its fee by hitting KPIs, not by the token price moving in a particular direction.
- Cons: it costs cash, which early-stage teams often lack right after a raise. The project also carries inventory risk if it supplies the tokens and stablecoins.
2. Token loan + call option model
The project lends tokens to the market maker for a fixed term (often a year or more) and pays little or no cash fee. In return, the market maker gets call options: the right, but not the obligation, to buy some or all of the loaned tokens from the project at pre-agreed strike prices when the term ends. If the token trades above the strike, the market maker exercises and keeps the difference as its profit. If it trades below, it returns the tokens.
- Pros: little or no upfront cash, which is why it is common for newly launched tokens.
- Cons: the economics are harder to see, and the incentives can drift away from yours.
How option terms can create sell pressure
This is the part founders most often underestimate. The following is our analysis of how the structure works, not an allegation about any specific firm:
- Hedging: a market maker holding call options is exposed to the token price. A common way to manage that exposure is to sell some of the loaned inventory, especially as the price rises toward or above the strike. That selling is economically rational for the market maker and still lands on your order book.
- Low strikes: if strikes are set close to or below the listing price, the options are valuable almost immediately. The market maker can profit from your launch without needing the token to grow.
- Large loan size: if the loan is a big share of circulating supply, one counterparty controls a lot of the float. The bigger the loan, the more its trading decisions move your price.
- Weak return terms: if the contract does not clearly say how and when loaned tokens come back (and in what form), you may not be able to verify that the inventory was used only for quoting.
None of this makes the loan model bad by default. It means the strike prices, loan size, term, and reporting obligations matter more than the headline "zero fee."
| Factor | Retainer model | Loan + call option model |
|---|---|---|
| Upfront cash | Monthly fee | Low or none |
| Who owns the inventory | Usually the project | Loaned to the market maker for the term |
| How the market maker profits | Fee, plus spread capture | Spread capture, plus option payoff if price ends above strike |
| Main founder risk | Cash burn, inventory losses | Hedging sales, low strikes, loss of float control |
| What to negotiate hardest | KPIs tied to the fee | Strike prices, loan size, return terms, reporting |
KPIs to Put in a Crypto Market Making Contract
GSR's startup guide advises projects to quiz market-making partners on "trading strategy, wash trading, and KPIs." In practice, a contract should define each KPI precisely enough that both sides can check it from data. We are deliberately not giving "standard" target numbers here: they depend on venue, token size, and market conditions, and we have not found a public, verifiable benchmark.
| KPI | What to define in the contract |
|---|---|
| Maximum spread (%) | Per venue and pair; measured how (time-weighted?) and how often |
| Depth at ±2% (or another band) | Minimum value on each side of the book within the band, in USD or stablecoin |
| Uptime | Share of time both quotes meet the spread and depth targets; exclusions (exchange outages) listed explicitly |
| Venues and pairs | Which exchanges and pairs are covered, and whether DEX pools are included |
| Reporting | Frequency (daily or weekly), format, inventory balances, account-level trade data where possible |
| Remedies | What happens on a miss: fee reduction, cure period, termination right, early return of loaned tokens |
Two practical tips. First, ask for raw data you can verify yourself, not just a summary dashboard. Second, check KPIs independently from public order-book data on the exchanges; for DEX pairs, a tool like DEX Screener helps you watch pool liquidity and trades (see our guide to tracking token liquidity with DEX Screener).
Red Flags: When a "Market Maker" Is Really Selling Manipulation
This is not theoretical. On October 9, 2024, the US Securities and Exchange Commission charged three companies "purporting to be market makers" (ZM Quant, Gotbit and CLS Global) and nine individuals. According to the SEC's complaints, token promoters hired ZM Quant and Gotbit to provide "market-manipulation-as-a-service," including generating artificial trading volume. The SEC alleged the firms self-traded ("wash trading") and used bots that "at times, generated quadrillions of transactions and billions of dollars of artificial trading volume each day." Part of the case involved a token created at the direction of the FBI as part of a parallel investigation, and the SEC noted that the US Attorney's Office for the District of Massachusetts announced parallel criminal actions the same day. These are SEC allegations as stated in the press release; read the complaints for detail.
Watch for these warning signs when you talk to providers:
- Guaranteed price or volume. GSR's guide calls price or volume targets "unethical, not to mention impossible to achieve in an efficient and orderly market." Anyone promising a price floor, a target market cap, or "top 10 volume rank" is describing manipulation or overpromising.
- Volume as the main deliverable. Spread, depth and uptime help traders. Volume for its own sake mostly helps rankings, and self-trading to inflate it is exactly what the SEC case targeted.
- Opaque token loans. No clear strike prices, no cap on loan size, no reporting on where the loaned tokens sit, or no clear return terms.
- No verifiable reporting. If you cannot audit trades or inventory, you cannot tell good market making from quiet dumping.
- Bundled "marketing + volume" packages. Offers that combine KOL promotion with volume generation around listing are a recurring pattern in manipulation cases.
If you are launching to EU users, note that the EU's Markets in Crypto-Assets Regulation (MiCA), which ESMA says entered into force in June 2023, includes rules aimed at market integrity, including market-abuse prohibitions. How they apply to your token and your market maker is a question for legal counsel, not a blog post.
KEY TAKEAWAYS
- Write spread, depth, uptime, venues, reporting and remedies into the contract with clear measurement rules.
- In loan + option deals, strike prices, loan size and return terms decide whose interests the market maker follows.
- The SEC's October 2024 case shows "market maker" can be a label for paid wash trading. Price or volume guarantees are the clearest warning sign.
How Market Making Interacts With Vesting, Unlocks and DEX Liquidity
A market maker works on top of your tokenomics. It cannot fix a supply schedule that dumps more tokens than the market can absorb.
- Unlock calendar: share your full vesting and unlock schedule with the market maker before signing, and plan extra depth around cliff dates. Order books that look healthy on a quiet day can thin out fast when a large tranche unlocks. If you need a refresher on the mechanics, see our explainer on what vesting means in crypto.
- Publish what you can: markets price uncertainty. A public, readable schedule lowers the risk of panic around unlocks, which is why we argue for transparent vesting schedules. Disclose the market-maker loan too, if your legal advisers agree, because loaned tokens are effectively part of the tradable float.
- DEX pools vs order books: on an automated market maker (AMM) pool, liquidity comes from the pool's reserves, not from someone quoting. Your project usually seeds that pool at TGE, and its size sets how much price impact a trade causes. Our piece on liquidity pools on crypto launchpads covers how pools work. For the market-maker deal, the questions are: who seeds and manages the pool, whether the market maker is expected to arbitrage between DEX and CEX prices, and whether pool liquidity is locked.
- Cross-venue consistency: if your token trades on a DEX and one or more centralized exchanges, the price gap between venues gets closed by arbitrage. Ask how the market maker handles that and whether DEX activity is part of its reporting.
What Launchpads and Exchanges Typically Require
Centralized exchanges generally do not publish fixed market-maker requirements for listings, and we have not found an official public checklist from the major exchanges. In practice, founders should expect exchanges to ask who will provide liquidity for the pair, so it helps to have a market maker selected, or at least shortlisted, before listing talks. If you are still deciding between a DEX launch and an exchange launch, our founder's guide to IDO vs IEO compares requirements and costs.
On the launchpad side, the focus is usually on what happens to the people who bought your tokens. At Kommunitas, a decentralized IDO launchpad, the assessment team reviews tokenomics, including supply distribution, vesting schedules and any buy/sell tax mechanics, before a project can raise. Our step-by-step guide to submitting an IDO on Kommunitas walks through the full application. Kommunitas does not appoint or endorse a market maker for projects; that relationship and its contract remain the founder's responsibility.
Useful launchpad conversations before TGE:
- Is the listing price and initial liquidity (DEX pool size, CEX market-maker inventory) consistent with the raise and circulating supply?
- Does the TGE unlock plus any market-maker loan put too many tokens on the market at once?
- Which post-listing protections (for example refund windows) apply to investors, and how would a weak market-making setup affect them?
Limitations: What a Market Maker Cannot Do
To keep expectations honest:
- It cannot create demand. If nobody wants the token, tight spreads just let holders exit more efficiently. Product, users and token utility drive price over time.
- It cannot fully offset heavy unlocks. A market maker absorbs flow up to the inventory and risk limits it agreed to. Large unlocks can overwhelm any order book.
- Good KPIs do not prove good behavior. A firm can meet spread and depth targets while its hedging still pushes price down. Reporting and option terms are your only real visibility.
- Small projects may not get top-tier terms. Larger firms are selective, and smaller tokens often have fewer providers to choose from. That makes due diligence more important, not less.
- The evidence base is thin. Most market-maker contracts are confidential, so there is little public data on "typical" fees, loan sizes or strike prices. Be skeptical of anyone quoting industry averages without a source.
A Founder's Checklist Before You Sign
- Decide on a model (retainer, loan + options, or hybrid) based on your cash runway and how much float you can afford to lend.
- Get written KPIs: spread, depth band, uptime, venues, measurement method, reporting frequency and remedies.
- For loans: cap the loan size, check strike prices against your listing price, and define return terms and on-chain or account-level reporting of the loaned tokens.
- Ask directly about wash trading and self-trading policy; walk away from any price or volume guarantee.
- Map the contract against your vesting and unlock calendar and your DEX pool setup.
- Have legal counsel review the agreement, especially if you serve US or EU users.
If you are preparing a raise and want your tokenomics reviewed before TGE, you can learn how projects launch on the Kommunitas launchpad.
Frequently Asked Questions
What does a crypto market maker do?
A crypto market maker continuously places buy (bid) and sell (ask) orders for a token on trading venues, so traders can buy or sell without moving the price too much. Its work is measured by spread, order-book depth near the mid price, and uptime.
How do crypto market makers get paid?
Usually in one of two ways: a retainer, where the project pays a recurring fee, or a token loan with call options, where the project lends tokens and the market maker can buy them later at pre-agreed strike prices. Market makers also earn from the bid-ask spread.
Is the token loan + call option model bad for founders?
Not automatically, but it needs careful terms. Low strike prices, very large loans or weak reporting can let the market maker profit without the token growing, and hedging can add sell pressure. Negotiate strikes, loan size, return terms and reporting.
What KPIs should a market maker contract include?
At minimum: maximum spread per pair, minimum depth within a price band such as plus or minus 2%, uptime, covered venues and pairs, reporting frequency and format, and remedies if targets are missed.
Is it legal for a market maker to guarantee volume or price?
Promising price or volume targets is a major red flag. In October 2024 the SEC charged ZM Quant, Gotbit and CLS Global, alleging they provided wash trading and artificial volume for token promoters. Legitimate market making is about providing liquidity, not engineering prices.
Does a launchpad provide a market maker?
Not necessarily. Kommunitas reviews tokenomics and vesting during its IDO assessment but does not appoint or endorse a market maker. The market-maker relationship and contract remain the founder's responsibility.
This article is educational and not legal, investment or financial advice. Market-maker terms vary; consult qualified legal counsel before signing any liquidity agreement. Sources checked October 28, 2026.