A global survey of more than 2,000 crypto participants across 98 countries has found that 52% do not trust crypto market makers. The findings come from the State of Crypto Market Making – 2025 report, which also reveals that 70% of respondents would “join the prosecution” if market makers were put on trial for their impact on the ecosystem.
The full 71-page report, independently commissioned by LO:TECH, has been provided as a free resource to the industry. It combines quantitative survey data with interviews from project founders, investors and industry experts, aiming to give token teams and the wider community a clearer view of how market-making relationships work in practice.
According to the research, 34% of crypto community members surveyed said they had lost money holding tokens in projects that publicly worked with market makers. A further 67% said greater transparency around activity and fees would improve trust.
Deal Structures Under Scrutiny
The report identifies structural risks in the agreements that underpin token liquidity. Token loan arrangements, often paired with call options in “Option + Loan” structures, were highlighted as a major source of misaligned incentives.
Poorly designed deals can enable behaviour such as token dumping or price manipulation. These actions may protect the market maker’s position but can harm a token’s stability. The report details how hedging strategies, such as delta hedging, can create sell pressure at or near a token’s launch, undermining early momentum.
In more extreme cases, market makers can exploit option mechanics to drive a token’s price towards profitable strike levels before rapidly selling down positions. This can amount to an engineered pump and dump amplified by the deal terms.
Push for Higher Standards
The authors call for a shift towards transparency and standardisation in market-making arrangements. Suggested reforms include:
- Publicly declaring deal terms and KPIs
- Providing real-time dashboards to token teams
- Aligning incentives through enforceable contracts
- Avoiding unnecessarily complex option structures
Survey data suggests there is appetite for reform. More than two-thirds of the crypto community say greater transparency would help rebuild trust, and half believe regulation could play a role, although fewer than one in five are confident it would be effective.
Practical Guidance for Founders
While much of the report focuses on problems in the sector, it also functions as a practical guide for token teams. It outlines methods for evaluating market makers, setting performance KPIs and weighing the trade-offs between different deal models.
Nathan Worsley, co-founder & CEO at Euphoria, described the report as “clear, grounded in first-principles reasoning, and essential reading for anyone serious about market structure – especially founders trying to understand how crypto market making works, how it can fail, and what matters most.”
Brandon Kumar, co-founder at Layer3, said, “Navigating the market making landscape as a founder often means making high-stakes decisions with limited information. This report is one of the few resources that actually helps reduce that asymmetry. It’s a valuable read for anyone trying to get smart fast.”
LO:TECH’s Perspective
LO:TECH, which commissioned the study, is a London-based digital asset trading firm offering market making, market data and OTC execution services. Founded to build unified, high-frequency trading infrastructure for centralised, decentralised and traditional finance venues, the company focuses on transparency and KPI-driven performance.
Its token market-making service gives clients real-time visibility into liquidity, with live order books, spreads, depth, KPIs and performance data across venues. LO:TECH says this approach is designed to address the trust gap identified in the report and to set it apart from opaque or misaligned practices still common in the sector.
“Clearly there’s work to be done to repair this damage, and it’s incumbent on the good market-making firms out there to put in the effort to improve the situation,” said Tim Meggs, LO:TECH’s CEO and co-founder, in the report’s foreword. “We commissioned this report to shine a light on the extent of damage bad behaviour has done, and to offer a resource for founders who want to understand what good market makers should be doing.”
The report is available to download in full at lo.tech/stateofmarketmaking.
This post is commissioned by LO:TECH and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.
