Two of the 12 months’s most chaotic token blowups — Motion Labs’ MOVE scandal and the collapse of Mantra’s OM — are sending shockwaves by means of crypto’s market-making companies.
In each circumstances, fast value crashes revealed hidden actors, questionable token unlocks, and alleged aspect agreements that blinded market individuals, 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 are not 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 area the place liquidity provision is entangled with non-public offers, tokenomics, and infrequently, insider politics.
A CoinDesk exposé in late April confirmed how some Motion Labs executives colluded with their very own market maker to dump $38 million value of MOVE within the open market.
Now, some companies 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 method now contains extra intensive preliminary discussions and academic classes with challenge groups to make sure they completely perceive market-making mechanics,” Hong Kong-based Metalpha’s market-making division informed CoinDesk in an interview.
“Our deal buildings have advanced to emphasise long-term strategic alignment over short-term efficiency metrics, incorporating particular safeguards in opposition to unethical conduct corresponding to extreme token dumping and synthetic buying and selling quantity,” it stated.
Behind the scenes, conversations are intensifying. Deal phrases are being scrutinized extra rigorously. Some liquidity desks are reevaluating how they underwrite token danger.
Others are demanding stricter transparency — or strolling away from murky tasks altogether.
“Initiatives now not settle for prestigious reputations at face worth, having witnessed how even established gamers can exploit shadow allocations or have interaction in detrimental token promoting practices,” Metalpha’s head of Web3 ecosystem Max Solar famous. “The period of presumptive belief 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 nicely 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 value discovery, some merchants say. And for market makers tasked with offering orderly liquidity, they’re changing into an more and more opaque and harmful variable.
“The secondary OTC market has modified the dynamics of the business,” stated Min Jung, analyst at Presto Analysis, which runs a market-making unit. “Should you take a look at tokens with suspicious value motion — like $LAYER, $OM, $MOVE, and others — they’re usually those most actively traded on the secondary OTC market.”
“The complete provide and vesting schedule has change into distorted due to these off-market offers, and for liquid funds, the actual problem is determining when provide is definitely unlocking,” Jung added.
In a market the place value is fiction and provide is negotiated in again rooms, the actual danger isn’t volatility for merchants — it’s believing the float is what the whitepaper and founders say it’s.
Learn extra: Motion Labs Secretly Promised Advisers Hundreds of thousands in Tokens, Leaked Paperwork Present
