Crypto projects choose a market maker based on four things: the fee model and whether it is understandable, verifiable references from projects at a similar stage, the exchanges and pairs actually supported, and whether the market maker holds a call option on the token. The last one matters most and is asked about least.
What does a market maker actually do?
A market maker places continuous buy and sell orders on an exchange so that anyone who wants to trade your token can, at a reasonable price, without moving the market.
Concretely, they maintain two things:
- Spread. The gap between the best bid and the best ask. A tight spread means a trader buying and immediately selling loses very little. A wide spread means every trade is expensive.
- Depth. How much can be bought or sold before the price moves by a given percentage. Thin depth means a $10,000 order swings your chart.
Exchanges care about both, because a token nobody can trade cleanly generates no fees and reflects badly on them. This is why many CEX listing agreements require a market maker as a condition.
When do you need a market maker?
Before your token lists, not after.
A token that goes live with an empty order book will be priced by whoever shows up first, which in practice means bots and snipers. The first hour of trading sets a reference price and a chart that lives forever. Fixing it later costs more than provisioning liquidity would have.
If you have a listing confirmed, you have somewhere between two and six weeks to select and onboard someone. That is enough time to speak to three or four firms properly. It is not enough time to run a leisurely process, which is why founders who wait end up choosing under pressure.
How do you evaluate a market maker?
1. Understand the fee model before anything else
There are broadly three, and they carry very different risk.
Monthly retainer. You pay a fixed fee. The market maker provides liquidity using capital you lend them or capital they bring. Simple, predictable, and the incentives are clean because they earn the same whether your token rises or falls.
Token loan plus call option. You lend the market maker tokens. They provide liquidity. They hold an option to buy those tokens at a strike price, usually above the launch price. This is standard practice at larger scale, and it is also where most of the industry's damage originated. If the strike is set badly, or if the option is large relative to float, the market maker profits from your token going up and can profit from selling into strength.
Retainer plus performance. A base fee with bonuses tied to depth, uptime or spread targets.
Ask directly: "Do you hold a call option on our token, and if so, what is the strike and the size?" A market maker who answers plainly is one you can work with. One who deflects has told you something.
2. Ask for references at your stage
A firm that market-makes for a top-fifty token has learned nothing transferable about a $5M market cap launch on MEXC. Ask for two projects at roughly your size, on roughly your exchanges, and speak to them without the market maker present.
The question worth asking those references is not "were you happy." It is "what happened when the price dropped thirty percent in a day?"
3. Check the exchanges and pairs they actually run
A firm may support twenty exchanges on their website and actively run five. Ask which desks they have live capital on today, and which pairs. If you are listing on LBank and they have never run an LBank pair, you are paying for their learning.
4. Ask what happens when it goes wrong
Order books go one-sided. Exchanges have outages. A whale dumps. Ask what the market maker does in each case, and what the contractual obligation actually is. Many agreements specify spread and depth targets during normal conditions and are silent about everything else.
What are the warning signs?
- Guaranteed price or volume. Nobody can guarantee a price. A promise of volume usually means wash trading, which will get you delisted.
- Refusal to explain the option structure. If they hold a call, you need to know the strike and the size.
- No named team. Anonymous market makers are common and sometimes fine. Anonymous market makers holding your tokens are a different proposition.
- Pressure to sign before your listing. Urgency is real. Manufactured urgency is a tell.
- Vague reporting. You should receive spread, depth and uptime figures on a schedule, in a format you can verify against the exchange's own data.
What should it cost?
Retainers for small and mid-cap tokens generally sit between $2,000 and $15,000 per month, depending on the number of pairs, the depth targets and whether the market maker brings capital. Below that range, question what is actually being provided. Well above it, ask what you are getting that a cheaper firm cannot deliver.
Token loans vary enormously and are the part of the deal that deserves a lawyer.
Frequently asked questions
Do you need a market maker to list on a CEX?
Often, yes. Many centralised exchanges require a market maker as a condition of listing, because a token with no liquidity generates no trading fees and reflects poorly on the exchange. Even where it is not required, launching with an empty order book means the first hour of trading is priced by bots.
How much does a crypto market maker cost?
Monthly retainers for small and mid-cap tokens typically range from $2,000 to $15,000, depending on the number of pairs and depth targets. Loan and call option structures vary widely and should be reviewed by a lawyer, because the strike price and option size determine how the market maker's incentives align with yours.
What is a call option in a market making agreement?
The project lends tokens to the market maker, who holds the right to buy those tokens at a fixed strike price. If the token rises above the strike, the market maker profits. This is standard at scale, but the strike and the size relative to circulating supply determine whether their incentives match yours. Ask both questions directly.
When should a project hire a market maker?
Before the token lists, ideally two to six weeks before the token generation event or CEX listing. That leaves time to evaluate three or four firms properly. Waiting until after launch means fixing a chart rather than shaping one.
What is a good spread for a crypto token?
It depends on the exchange and the token's liquidity, but a spread under one percent on a major CEX pair is generally healthy for a small cap, and under 0.3 percent for larger tokens. More important than the number is whether it holds during volatility, which is when a market maker either earns their fee or does not.
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