Getting a token from inception to market is a complex process that requires careful planning and dedication. Achieving fair price discovery and stability is crucial for the success of the token, and market makers play a key role in this process. The journey of token pricing can be divided into four main phases: pre-generation construction, primary listing, price discovery and expansion, and cyclical growth. Each stage is essential for the token’s transition from private to public markets and requires a well-thought-out strategy.
It is essential for projects to carefully choose a market maker during the pre-market planning and public listing stages, as this decision can impact the project’s success in the early stages. Working with a market maker known for predatory and opaque practices can be detrimental to the project and its community. During a primary listing, market makers have access to a significant portion of the circulating supply of the asset, granting them the power to manipulate liquidity and create artificial scarcity, leading to unsustainable price levels.
Projects must conduct thorough due diligence when selecting a market maker and prioritize transparency and symbiotic strategies over companies with a history of controversy and market manipulation. While there is a negative perception of market makers as greedy manipulators, there are also credible and expert market makers focused on fair deals, transparency, and market efficiency.
When choosing a market maker, projects should understand the business model the market maker operates under and analyze the incentives that drive their decision-making process. It is crucial to avoid conflicts of interest and opt for a fully custodial or loan model rather than an API key connected to exchange accounts. Additionally, gathering feedback from other founders about their experiences with different market makers can provide valuable insights.
Demanding real-time transparency from market makers, regardless of the financial structure, is essential to prevent harm to the industry. Transparency in market maker and exchange operations is crucial for maintaining integrity and professionalism in the crypto industry. By setting high standards for market makers, projects can promote accountability and trust within the market.
