80% of post-TGE failures come down to one thing: weak market structure.

A token’s performance after launch depends heavily on how well it trades: whether it has enough liquidity, stable pricing, and strong coverage across exchanges. Market makers are essential to making this possible, yet they are often misunderstood or not fully used.

This article explains five key ways market makers support healthy token markets: helping with liquidity, managing price swings, keeping prices aligned across venues, meeting exchange standards, and building investor trust. Using insights from the 2025 State of Crypto Market Making report and recent real-world examples, we show why market making should be treated as a core part of token infrastructure, not an optional service.

What is a market maker?

A market maker (MM) is an entity that continuously provides liquidity on both the buy and sell sides of an order book. In doing so, MMs enable efficient price discovery and facilitate smooth trading activity for other market participants. In crypto, this typically involves deploying capital on centralized or decentralized exchanges to maintain tight spreads and reduce slippage for users. Without market makers, assets would experience fragmented liquidity, wide bid-ask spreads, and poor trading experiences.
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In traditional finance, MMs have long operated in equities and commodities. In crypto, the model has adapted but retains the same core principle: stand in the middle to match orders and make trading possible. MMs are especially critical for new or thinly traded tokens where organic volume is insufficient to attract retail or institutional traders.
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As of 2025, only 28% of token projects maintain consistent MM coverage across all major exchange listings, according to the State of Crypto Report 2025. This results in fragmented liquidity and inconsistent market depth. The lack of reliable liquidity discourages organic order flow and hinders adoption by retail and institutional participants.

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What is their role in token projects and their day-to-day tasks?

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The role of a market maker in a token project is to ensure orderly markets across exchange listings, manage liquidity allocation, and execute strategies that support price stability without manipulation. MMs are not price guarantors. Their role is to facilitate fair markets, not to pump, shield, or artificially support prices.
Daily responsibilities typically include monitoring order books, adjusting liquidity deployment based on volume trends, market conditions, and volatility, rebalancing positions across exchanges, and ensuring depth is in line with agreed KPIs (such as 2% depth or $X in volume targets). MMs also implement automated strategies that respond to volatility, slippage, and asymmetric order flow.

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Real-world application of this is evident in recent events surrounding perpetual DEXs such as Hyperliquid. As noted in a 2025 industry discussion, Hyperliquid’s vault APY spiked to over 100% during a major liquidation cascade. While retail traders were liquidated, LPs (liquidity providers) including market makers captured significant profits from spread and volatility. The event revealed both the opportunities and risks associated with MM operations during high-volatility regimes.

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Mature MMs often provide token teams with analytics and dashboards showing real-time liquidity metrics across venues. This helps teams make informed decisions about marketing, listings, and community engagement, based on actual market conditions rather than sentiment alone.

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Why do we assume Markets Makers are black boxes

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The "black box" reputation stems from two core issues: lack of transparency and misaligned incentives. Most MMs operate with minimal reporting, unclear fee structures, and non-disclosed strategies. Token teams are often left guessing whether KPIs are met or if capital is being used effectively. In many cases, retainer agreements are fulfilled without any obligation to perform against defined benchmarks.

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In recent reports, we’ve found that 42% of token teams listed lack of reporting clarity as their top frustration. This lack of transparency has led to distrust and tension between projects and liquidity providers. Anecdotally, teams have reported instances where market makers fail to show up at critical listing events or refuse to scale liquidity post-launch.

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Contrast this with emerging best practices in the space. Transparent MMs now offer capital usage breakdowns, spread performance reporting, and clearly defined execution plans tailored to each exchange. Projects that demand this level of transparency have been better positioned to optimize their liquidity programs and avoid wasted capital.

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Hiring Market Makers vs. Doing it yourself

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It is possible for teams to execute their own liquidity strategies. Open-source tools like Hummingbot make basic strategies accessible. However, managing liquidity manually or with minimal infrastructure is capital inefficient, operationally burdensome, and difficult to scale across multiple venues.

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Market making is not just about placing limit orders. It requires continuous strategy adjustment, latency optimization, risk controls, infrastructure to monitor spreads and depth, and capital rebalancing across CEXs and DEXs. Mistakes can lead to unintentional price swings, capital loss, or being out-competed by better-equipped MMs.
During recent market volatility, specifically the liquidation event that wiped out an estimated $1.5 billion in open interest, projects that managed their own liquidity were often unable to respond in real time. Exchange-side APIs failed, bots stalled, and spreads widened beyond acceptable levels. This highlights the operational fragility of in-house MM setups during stress scenarios.

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Most token teams lack the internal resources or technical capabilities to build and operate a full MM stack. In-house liquidity management is viable only in niche cases or for projects with deeply specialized teams. For the majority, partnering with professional MMs remains the most practical option.

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As a token project founder, is it worth investing into Market Makers?

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Yes, if structured correctly. The value of a market maker is in ensuring that your token is tradable, visible, and able to support the liquidity expectations of both investors and users. According to the reports, 79% of investors said visible liquidity affects their perception of a token's credibility.

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Liquidity affects everything, from exchange ranking to investor appetite to community trust. Without it, price volatility increases, user experience suffers, and token adoption slows. Yet MMs should not be hired blindly. Token teams must define terms that align incentives and ensure deliverables.

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The report shows a shift away from fixed retainers toward more capital-efficient models. Loan-based agreements grew 22% YoY, suggesting projects are demanding performance-linked structures. This reflects a broader market maturity and an effort to maximize ROI on liquidity spend.

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Five Core Drivers of Token Health

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Impact of Poor Liquidity and Failed Listings

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A lack of consistent market making coverage directly affects a token’s viability across exchanges. According to reports, only 28% of token projects maintain MM support across all primary listings. For the remaining 72%, the absence of strategic liquidity results in fragmented markets, wide bid-ask spreads, and inconsistent pricing.

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This disjointed trading experience often leads to failed listings. Projects report that early exchange launches without MM support see limited organic trader engagement, volatility from even small sell orders, and negative community feedback due to slippage. These symptoms not only undermine short-term price stability, they damage long-term trust. In many cases, exchanges themselves recommend re-listing only after adequate liquidity measures are implemented.

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Managing Unlocks and Volatility

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Market makers also play a key role during high-volatility periods, particularly around token unlocks and liquidations. While unlock management isn’t always explicitly built into MM agreements, market events such as the mass liquidations seen in early 2025 highlight the importance of liquidity providers in moments of stress.
During that event, retail traders were liquidated at scale, especially across decentralized perpetual platforms like Hyperliquid. As the Enflux Insights episode noted, LPs, including MM-aligned vaults, were able to absorb the impact by widening spreads and capturing volatility-driven P&L. This helped stabilize trading conditions, whereas tokens without such infrastructure saw cascading price collapses and prolonged recovery times.

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Unlock events have similar effects. If not actively managed, scheduled token releases introduce sudden sell pressure. In shallow markets, these unlocks can trigger disproportionate price reactions. MMs buffer this by ensuring order book depth, smoothing out volatility, and enabling natural price discovery.

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Cross-Venue Liquidity Strategy

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Tokens rarely trade on a single venue. As projects scale, they often list across multiple centralized exchanges (CEXs) and decentralized exchanges (DEXs), with different pairs and liquidity conditions. Without centralized coordination, these listings become desynchronized, creating price discrepancies, arbitrage gaps, and inconsistent volume distribution.

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Market makers solve this by rebalancing inventory across venues. According to the 2025 report, professional MMs deploy dynamic cross-exchange liquidity strategies that align spreads and volumes across all trading environments. This ensures users see consistent pricing regardless of where they buy or sell the token.
Without MM coordination, the result is inefficient markets. Price differences encourage arbitrage bots that extract value without contributing to volume depth. This undermines long-term holder confidence and can deter new entrants.

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Exchange Listing Requirements

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Exchanges, especially Tier 1 and Tier 2 venues, enforce minimum standards for liquidity, volume, and spread width. While these thresholds are rarely public, failing to meet them risks delisting or shadow delisting (where tokens remain listed but are algorithmically deprioritized in search or trading tools).
Liquidity affects more than user experience. Exchanges use it as a proxy for token health, project engagement, and future growth potential. The 2025 report highlights that consistent MM support significantly improves token visibility and exchange engagement over time.

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Some exchanges even require projects to demonstrate MM partnerships as part of the listing application process. In these cases, underperforming liquidity metrics can block expansion plans, limit market reach, and constrain treasury fundraising.

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Investor Perception and Confidence

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Liquidity is a sign for Investors use it to evaluate a token’s seriousness, market readiness, and underlying support. According to the reports, 79% of investors said that visible liquidity directly influences their perception of a token’s legitimacy.

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Retail users mirror this behaviour. Thin books, wide spreads, or sudden slippage create the perception of abandonment, even when teams remain active. This leads to faster community churn, fewer organic trades, and more reliance on promotional capital to sustain interest.

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Market makers act as a trust layer between project teams and market participants. Their presence signals planning, professionalism, and an intent to build a sustainable ecosystem. In volatile or low-liquidity environments, that trust becomes a critical differentiator.

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Each of these five factors, liquidity structure, volatility response, cross-venue consistency, exchange compliance, and investor confidence, defines how a token performs in the market. Projects that overlook market making often fail not due to weak fundamentals, but because of how their token trades across venues.

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Market making is not optional infrastructure but a structural necessity. The real question is not whether to engage a market maker, but how to structure the partnership, monitor its execution, and align it with long-term goals. When done right, MMs support trading activity, restore confidence for investors, and have sustainable expansion. When done poorly, they become a cost center with little strategic return. The difference is defined by transparency, data, and oversight.

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