To compare market maker proposals, first normalize them to the same scope (venues, pairs, spread and depth targets, uptime, term, and who funds inventory), then compare total expected cost over the term under falling, flat, and rising token prices, counting cash fees, profit shares, and the option value of any token loan. Then score the terms that protect you: KPIs you can verify against exchange data, regular reporting on inventory and loaned tokens, a named legal entity, termination and token-return terms, and no promises of volume or price. A cheap proposal with weak reporting or open-ended options is usually the expensive one.
Key takeaways
- Normalize scope first; never compare a 1-venue quote to a 3-venue quote.
- Compare total cost under falling, flat, and rising prices.
- Option value in a token loan is often the largest cost.
- Score reporting, KPIs, and exit terms, not just price.
- Any promise of volume or price disqualifies a proposal.
Step 1: put every proposal on the same scope
Prefer a spreadsheet? Download the comparison template (CSV); it has every row from the tables below.
| Item | Proposal A | Proposal B | Proposal C |
|---|---|---|---|
| Venues and pairs | |||
| Spread target (e.g. bps) | |||
| Depth target (e.g. USD within ±2%) | |||
| Uptime target | |||
| Term and notice period | |||
| Who funds inventory (stables, tokens) | |||
| Token loan size and as % of circulating supply |
If one proposal covers fewer venues or looser targets, ask that firm to re-quote on the common scope before you compare.
Step 2: compare total cost under three price paths
| Cost line | Falling price | Flat price | Rising price |
|---|---|---|---|
| Cash fees over the term | |||
| Profit share paid | |||
| Option cost (tokens bought below market) | |||
| Total |
Forgd Academy describes loan-plus-option deals as typically having zero or near-zero cash fees with options in tranches at escalating strikes, which is why the rising-price column often decides the comparison. Fill these in with the cost calculator.
Step 3: score the protective terms
Score each 0 (missing), 1 (vague), or 2 (clear and verifiable).
| Term | What “2” looks like |
|---|---|
| KPIs | Spread, depth, and uptime per venue, measured against exchange data |
| Reporting | Regular reports on inventory, trades, and loaned-token balances |
| Legal entity | Named entity and jurisdiction in the contract |
| Termination | Clear notice period; no penalty beyond the term agreed |
| Token return | Loaned tokens (or the agreed amount) returned on a defined schedule |
| Option terms | Strikes, tranches, and exercise windows stated; no strikes below launch price without reason |
| Conduct | Explicit ban on wash trading and price promises |
In 2024 the U.S. SEC charged firms that marketed themselves as market makers for wash trading on behalf of token clients. A proposal that promises volume or price should score zero overall, whatever its cost. See market maker red flags.
Step 4: decide
Choose the proposal with the best protective-terms score whose total cost you can carry in the falling-price case. If two are close, prefer the one with better reporting: it is the term that lets you fix problems later.
Frequently asked questions
How many market maker proposals should we get?
Two or three comparable proposals is usually enough to see the market for your scope. More than that adds work without much new information. Send every firm the same brief.
What is the most important term in a market making proposal?
Apart from cost, the terms that let you check and exit the arrangement: KPIs measured against exchange data, regular reports on inventory and any loaned tokens, and clear termination and token-return clauses. See the agreement checklist.
How do we compare a retainer to a token loan with options?
Convert both to total expected cost over the same term under three price paths. A retainer is fixed cash; a loan’s cost depends on where the price ends relative to the strikes. Use the cost calculator and see retainer vs loan-option model.
Can CEX Ready review proposals we already have?
We can introduce you to a vetted partner for a second opinion or a comparable proposal. We don’t give legal or investment advice; have counsel review the contract.
Sources
- Forgd Academy: How are loan plus call option engagements typically structured?
- U.S. SEC press release 2024-166 (9 Oct 2024)
Last reviewed 12 November 2026. Exchange and platform policies change; always confirm on the official page before acting.