Two of the yr’s most chaotic token blowups — Movement Labs’ MOVE scandal and the collapse of Mantra’s OM — are sending shockwaves by crypto’s market-making companies.
In each instances, speedy worth crashes revealed hidden actors, questionable token unlocks, and alleged aspect agreements that blinded market members, with OM falling greater than 90% inside hours late April on no obvious catalyst.
Not like conventional finance, the place market makers present orderly bid-ask spreads on regulated venues, crypto market makers usually function extra like high-stakes buying and selling desks.
They don’t seem to be simply quoting costs; they’re negotiating pre-launch token allocations, accepting lockups, structuring liquidity for centralized exchanges, and typically taking fairness or advisory stakes.
The result’s a murky house the place liquidity provision is entangled with personal offers, tokenomics, and infrequently, insider politics.
A CoinDesk exposé in late April confirmed how some Movement Labs executives colluded with their very own market maker to dump $38 million price of MOVE within the open market.
Now, some corporations are questioning whether or not they’ve been too informal in trusting counterparties. How do you hedge a place when token unlock schedules are opaque? What occurs when handshake offers quietly override DAO proposals?
“Our approach now includes more extensive preliminary discussions and educational sessions with project teams to ensure they thoroughly understand market-making mechanics,” Hong Kong-based Metalpha’s market-making division instructed CoinDesk in an interview.
“Our deal structures have evolved to emphasize long-term strategic alignment over short-term performance metrics, incorporating specific safeguards against unethical behavior such as excessive token dumping and artificial trading volume,” it said.
Behind the scenes, conversations are intensifying. Deal terms are being scrutinized more carefully. Some liquidity desks are reevaluating how they underwrite token risk.
Others are demanding stricter transparency — or walking away from murky projects altogether.
“Projects no longer accept prestigious reputations at face value, having witnessed how even established players can exploit shadow allocations or engage in detrimental token selling practices,” Metalpha’s head of Web3 ecosystem Max Solar famous. “The era of presumptive trust has concluded,” he claimed.
Beneath the polished floor of token launch bulletins and market-making agreements lies one other layer of crypto finance — the secondary OTC market, the place locked tokens quietly change palms properly earlier than vesting cliffs hit the general public eye.
These under-the-table offers, usually struck between early backers, funds, and syndicates, are actually distorting provide dynamics and skewing worth discovery, some merchants say. And for market makers tasked with offering orderly liquidity, they’re turning into an more and more opaque and harmful variable.
“The secondary OTC market has changed the dynamics of the industry,” stated Min Jung, analyst at Presto Analysis, which runs a market-making unit. “If you look at tokens with suspicious price action — like $LAYER, $OM, $MOVE, and others — they’re often the ones most actively traded on the secondary OTC market.”
“The entire supply and vesting schedule has become distorted because of these off-market deals, and for liquid funds, the real challenge is figuring out when supply is actually unlocking,” Jung added.
In a market the place worth is fiction and provide is negotiated in again rooms, the actual threat isn’t volatility for merchants — it’s believing the float is what the whitepaper and founders say it’s.
Learn extra: Movement Labs Secretly Promised Advisers Tens of millions in Tokens, Leaked Paperwork Present
