What Is the Real Cost of a Market Maker?

there are three market making contract models in crypto. most founders sign one without understanding what they're agreeing to.

1) retainer

fixed monthly fee. the market maker operates via API keys on your exchange accounts – no ability to deposit or withdraw funds. all volatility profit goes to the project. the market maker earns only what's on the invoice. full transparency, aligned incentives.

for most projects under $100M market cap, this is the only model that makes sense.

2) loan

project lends tokens to the market maker. no monthly fee. looks clean on paper.

here's what happens: market maker receives 2.5M tokens at $1.00 TGE price. listing day hype pushes price to $3.00 – they sell. three to six months later, unlocks hit, hype fades, price drops to $0.50 – they buy back. return the tokens per contract. terms fulfilled.

net result: market maker made $6.25M on the price difference alone. project has a collapsed chart and the same tokens now worth a fraction of TGE price. everything was in the agreement.

loan works when market cap is above $100M – at that scale no single loan can meaningfully manipulate price. it's also required on certain exchanges (Coinbase for ex). and for large projects it enables competition between multiple market makers which tightens spreads.

3) "free"

there is no free market making. if there's no invoice, you're paying in tokens, in price control, in community trust.

any founders here who saw this?