To compare market-making deals, calculate each one’s total cost over the same term under several token-price scenarios: a retainer costs its fees (monthly fee × months + any setup fee); a token loan with call options costs the value the project gives up on each tranche the market maker exercises, which is (price at expiry − strike) × tokens in that tranche when the price ends above the strike, plus any fee; a profit share costs the agreed percentage of trading profit plus any base fee. The calculator below does this for falling, flat, and rising prices.
Key takeaways
- A token loan looks free when prices fall and becomes the most expensive model when prices rise.
- Compare models over the same term and the same scope (venues, depth, KPIs).
- Tranches with higher strike premiums cut the option cost sharply.
- Inventory you provide is yours in every model; it is not counted as a cost here.
The formulas
| Model | Total cost over the term |
|---|---|
| Retainer | monthly fee × months + setup fee |
| Token loan + call options | Σ over tranches of max(0, expiry price − strike) × tokens in tranche, + any fee × months |
| Profit share | (gross trading profit × share % + base fee) × months |
Strike = reference price × (1 + premium). The reference price is usually a spot or time-weighted average price around the start date; check how your contract defines it.
Worked example with the default inputs
Default inputs: a 12-month term, a $10,000 monthly retainer, a loan of 1,000,000 tokens at a $0.50 reference price in two equal tranches at +10% and +30% strikes, and price scenarios of 0.5× and 3×.
| Scenario | Retainer | Token loan + options | Profit share (50% of $15,000/month) |
|---|---|---|---|
| Price falls to $0.25 | $120,000 | $0 (tokens returned) | $90,000 |
| Flat at $0.50 | $120,000 | $0 | $90,000 |
| Rises to $1.50 | $120,000 | $900,000 | $90,000 |
With the price at $1.50, tranche 1 (500,000 tokens, strike $0.55) gives up (1.50 − 0.55) × 500,000 = $475,000 and tranche 2 (500,000 tokens, strike $0.65) gives up (1.50 − 0.65) × 500,000 = $425,000, so the loan costs the project $900,000 in value, against $120,000 for the retainer. If the price falls, the loan costs nothing in options, but the market maker also had less reason to defend the price. All numbers are illustrative, not quotes; profit-share cost depends entirely on the profit you assume.
Frequently asked questions
How is the cost of a token loan with call options calculated?
For each tranche, if the token price at expiry is above the strike, the market maker exercises and pays the strike for tokens worth more; the project’s cost is (expiry price − strike) × tokens in the tranche. If the price is at or below the strike, the tokens are returned and the option cost is zero.
What strike premiums do real deals use?
Public DAO proposals give examples: one 2025 proposal used two call options at 5% and 15% premiums to the reference spot price. See public market-maker deal terms. Your terms depend on your token and negotiation.
Does the calculator include the inventory we lend?
Only the part given up through exercised options. Returned tokens are not a cost, though a lower price at return means the tokens are worth less, which happens whatever model you use.
Is this financial advice?
No. It is a simplified model to compare proposals. Have contracts reviewed by a lawyer and model the exact option terms you are offered.
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