A market maker is doing its job if, on every venue in the contract, it keeps the spread within the agreed target, maintains the agreed depth within ±2% (and other bands) on both sides, meets the uptime commitment, reports against those KPIs, and keeps quotes up during volatility. If spreads are routinely wider than agreed, the book is thin on one side, quotes vanish during sell-offs, reports are vague, or you can’t see the accounts, ask for a fix in writing or get a second opinion from another firm before renewing.
Key takeaways
- Measure spread, depth at ±2%, and uptime on each venue against the contract.
- Check behaviour during volatility, not just on calm days.
- Ask for account-level reports; vague summaries are a warning sign.
- Review loan and option terms before renewing; see public deal terms.
- A second firm on some venues adds redundancy and a benchmark.
A self-check you can run today
| Check | How | Warning sign |
|---|---|---|
| Spread | Best ask − best bid ÷ mid, on each venue; use the spread calculator | Routinely wider than the contract target |
| Depth at ±2% | Sum resting bids and asks within 2% of mid | One side much thinner, or below the contract minimum |
| Uptime | Snapshot the book at random times for a week | Gaps with no quotes, especially at night or weekends |
| Volatility behaviour | Watch the book during a sharp move | Quotes pulled or spread widens far beyond the target |
| Reporting | Read the last three reports | No per-venue KPIs, no account-level data |
| Inventory | Compare loaned tokens with what you can see on venues | Tokens unaccounted for, or large one-way selling |
| Terms | Re-read strikes, fees, term, and termination | Strikes far below the current price; no KPI remedies |
When to look for a second firm
- Repeated KPI breaches that the reports don’t mention.
- A new exchange listing coming up that your current firm doesn’t cover.
- A contract renewal with worse terms, or option strikes that hand over most of the upside.
- No access to account-level data.
What a second opinion covers
A vetted partner reviews your current order books and terms, tells you what it would do differently, and quotes the same scope so you can compare. Use the cost calculator to compare structures, and the KPIs guide to set targets.
Frequently asked questions
How do I know if my market maker is underperforming?
Compare live order books with the KPIs in your contract: spread at the top of the book, depth within ±2% on both sides, and uptime. Check several times a day, including during volatile hours. If you see repeated breaches and the reports don’t mention them, the market maker is underperforming.
Can I have two market makers?
Yes. Many projects use different firms on different venues, or two firms on the same venue with coordination. It adds redundancy and gives you a benchmark for each firm’s performance.
What should I do before my market-making contract renews?
Collect three months of KPI data, review the loan size and option strikes against the current price, check termination and token-return clauses, and get at least one competing proposal on the same scope. Our agreement checklist lists the clauses to review.
Is a second opinion free?
Yes, for projects. We introduce you to a vetted partner who can review your order books and propose terms. The partner may pay CEX Ready a referral fee if you choose to work with them.