To choose a crypto market maker, verify the firm’s legal identity and track record, confirm it already operates on your target exchanges, get a plain-language explanation of its quoting and risk approach, and compare proposals on written KPIs (spread, depth, uptime), loan and option terms, custody arrangements, reporting, and termination rights. Reject any firm that sells volume, price targets, or guaranteed outcomes.
Key takeaways
- Compare proposals on identical scope: same venues, pairs, KPIs, and term.
- KPIs must be measurable from public order-book data, not just the firm’s own reports.
- Read option strikes, loan size, and default terms with counsel.
- Inventory goes only to accounts named in the contract.
- Walk away from volume promises and price targets.
Step 1: Verify identity and history
- Registered legal entity, jurisdiction, and the people who run it
- How long they have operated and on which venues
- Any public enforcement actions or litigation (search regulators’ sites)
- References you find yourself, from projects they did not hand-pick
Step 2: Confirm venue coverage
Ask which of your target exchanges they already trade on, whether they have API connectivity and fee tiers there, and how quickly they can start on a new venue.
Step 3: Understand the strategy
They should explain in plain language how they set quotes, how they manage inventory, how they behave in volatility, and what risk limits apply. Vague answers, or answers that focus on “volume”, are a warning sign.
Step 4: Get KPIs in writing
| KPI | Ask for |
|---|---|
| Spread | Maximum time-weighted spread per pair |
| Depth | Minimum notional per side at ±2% (and possibly ±1%, ±5%) |
| Uptime | % of time targets are met, with defined exclusions |
| Reporting | Frequency, format, data source |
See market maker KPIs.
Step 5: Model the economics
Compare every proposal over the same period, including retainer, loan size, option strikes, and any performance fees. See retainer vs loan and option models and token loan terms.
Step 6: Lock down custody
The contract should name the exchange accounts or wallets that receive inventory, define reporting of balances, and set out return of assets at the end or on termination. Never send inventory to a personal wallet.
Step 7: Termination and exit
Check notice periods, what happens to loaned tokens and options on early termination, and how quickly assets must be returned.
Scoring sheet
| Criterion | Weight | Firm A | Firm B |
|---|---|---|---|
| Identity and track record | High | ||
| Venue coverage | High | ||
| KPI commitments | High | ||
| Economics over term | High | ||
| Custody and reporting | High | ||
| Strategy clarity | Medium | ||
| References | Medium | ||
| Termination terms | Medium |
Frequently asked questions
How many market makers should a token have?
Many projects start with one firm and a clear scope. Larger tokens sometimes use two or more to avoid dependence on a single provider and to compare performance. More firms mean more inventory and coordination.
Should we choose the market maker with the cheapest retainer?
Not on price alone. A low retainer can come with a large token loan and generous call options, or loose KPIs. Convert each proposal into total expected cost and obligations over the term.
What should be in a market-making agreement?
Scope (venues and pairs), KPIs and how they are measured, reporting, inventory and loan terms, option strikes and exercise windows, custody and named accounts, fees, prohibition on manipulation, confidentiality, term, termination, and return of assets.
Need a market maker or listing help?
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