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Market Makers

The Lure of Market Makers: A Founder’s Cautionary Tale

You’ve built something special. The concept is solid, maybe even ground-breaking. You’ve got a community starting to take shape, early believers who see your vision and want to be part of it. You’re at that critical moment where everything you’ve worked for is about to become real. It’s time to take the leap and launch your token into the market.

At this stage, you may be considering engaging a market maker and for good reason. When used correctly, market makers can be a valuable tool. They help provide liquidity, ensuring your community members can trade your token without frustration. This liquidity creates smoother transactions, encourages participation, and fosters confidence in the market. For projects with an established vision and growing demand, market makers can be an important part of building momentum.

But this isn’t always the story. For many founders, the reality is more complicated. The pressures are mounting. Early investors, the ones who believed in your project from the start, are asking for results. They want to see returns, milestones, and movement. At the same time, your project’s runway is shrinking, and your burn rate is catching up with you. The budgets are tighter than ever, and you feel the clock ticking.

It’s at this moment of vulnerability that market makers and Centralized Exchange (CEX) listing packages often enter the conversation. They promise liquidity, visibility, and success. They make it sound like the next logical step. After all, what’s a token launch without liquidity and trading volume? The dream of seeing your token live, climbing in value, and attracting even more attention feels so close.

But this is also where the risk begins. Because when market makers are used out of desperation, rather than as part of a strategic plan, they can quickly turn from helpful tools to devastating traps. And when paired with the allure of CEX packages, many projects find themselves chasing an illusion rather than building something real.

Determining the Need for Market Makers

Before engaging a market maker, founders must evaluate whether it’s the right step for their project. Consider the following:

  • Is a Market Maker Necessary at This Stage? Market makers are most beneficial during early-stage listings, such as an Initial Exchange Offering (IEO), where trading volume and market depth are low. If your token is already trading with sufficient liquidity and community activity, the benefits of a market maker may not justify the costs.
  • What Do You Want to Achieve? If your strategy includes scaling your protocol to high-volume activity or securing listings on top-tier exchanges like Binance or Crypto.com, market makers can help bridge liquidity gaps and foster trust among traders. However, the decision should align with a broader growth plan.

Market Makers – The Target

You, the founder or developer, are their ideal prey.

Your team has worked tirelessly to build your project. You’ve fine-tuned your tokenomics, lined up your initial supporters, and you’re now facing the daunting challenge of launching into the wider market. It’s a vulnerable moment. You want your project to be taken seriously. You want your token to succeed. And in walks the market maker.
They know exactly how to appeal to your insecurities. “Without liquidity,” they’ll say, “your project won’t survive. No one will take you seriously without volume. We can make you visible.” The promises come thick and fast:

  • We’ll create liquidity pools and order books.
  • We’ll stabilize your token price.
  • We’ll attract investors with high trading volumes.

If that isn’t enough, they’ll point you to a CEX listing deal. “Imagine being listed on a top exchange,” they’ll say. “Think of the exposure. Think of the credibility.”
It all sounds too good to pass up. But that’s the trap.

The Pros and Cons of Market Makers

When weighing the decision, it’s important to consider both the advantages and risks:

Advantages:

  • Narrowing Spreads: Reducing bid-ask spreads creates a more attractive trading environment.
  • Liquidity Promotes Liquidity: Initial liquidity can encourage more trading, fostering a self-reinforcing cycle of activity and visibility.
  • Price Stability: High liquidity cushions the impact of large trades, maintaining investor confidence.

Risks:

  • High Fees: The cost of engaging a market maker includes setup fees, recurring fees, and potentially performance-based fees.
  • Dependence on Artificial Volume: Excessive reliance on fabricated liquidity can leave projects vulnerable once the market maker steps away.

The Reality Behind the Market Makers Promises: The Costly Illusion of CEX Listings

The promises come fast and thick: market makers will stabilize your token’s price, create liquidity, and drive trading volumes. Pair this with a flashy CEX listing package, and it feels like the dream of instant legitimacy is within your grasp. It’s everything a founder could hope for visibility, credibility, and the appearance of success. But it’s also a costly illusion, one designed to exploit your ambition and leave your project more vulnerable than ever.

Here’s how the story typically plays out.

Your token launches with the support of a market maker and a prominent CEX listing. At first, everything seems perfect. Trading volumes soar, prices stabilize, and your project finally gets the attention it deserves. But peel back the layers, and the cracks begin to show. Much of that volume isn’t real; it’s the result of wash trading transactions executed by the same entity, buying and selling your token to create the illusion of demand.

Take the recent example exposed by Protos. A market maker manipulated the trading volume of a token created for a Federal Reserve pilot program, inflating activity through wash trading. This deceptive practice misled observers into believing the token had genuine market demand. The activity was orchestrated by the market maker, creating an illusion to attract investors. The same strategies are often applied to emerging projects, leaving founders and their communities holding the bag when the illusion fades.

As for price stability? It’s a mirage. Market makers often employ strategies that prioritize their profits over your project’s health. By exploiting price discrepancies, they rake in short-term gains while your token’s long-term value and sustainability fall by the wayside. Their goal isn’t to support your vision; it’s to squeeze every drop of profit from the market activity they create.

Meanwhile, the CEX listing, billed as a badge of legitimacy, becomes an anchor. The high listing fees drain your project’s budget, leaving little for development or community building. And the “exposure” you were promised? It’s fleeting. Once the initial hype fades, so does the fabricated trading volume, leaving your token to flounder in a sea of real competition. As explored in ANSG’s recent article, many projects fall into this trap, mistaking a costly CEX listing for long-term success, only to realize it was just another part of the illusion.

It’s a harsh cycle. Founders pour their resources into these deals, only to be left with disillusioned investors, a volatile market, and a project struggling to regain its footing. The worst part? This isn’t an anomaly it’s a pattern, repeated across the industry as market makers and CEX platforms prey on the hopes and vulnerabilities of emerging projects.

How to Protect Yourself

The crypto space doesn’t have to feel like a minefield. As someone who has seen this pattern repeat itself time and again, I want you to know that there are ways to navigate these challenges without falling prey to manipulation.

First, recognize the tactics for what they are: predatory. Market makers and CEX packages thrive on the “fake it till you fail or make it” mentality. They feed on the insecurities of founders and the hype culture of crypto. But you’re not just any founder. You’re building something real, something meaningful, and you don’t need their shortcuts to prove it.

Second, prioritize long-term growth over quick wins. Build your liquidity organically. Create a community that believes in your project because of its value, not its perceived volume. And when you do engage with market makers or exchanges, demand transparency. Hold them accountable for their actions, and don’t be afraid to walk away if their goals don’t align with yours.

Navigating the Path Forward

At ANSG, we’ve seen too many promising projects fall victim to the same traps. Founders with vision and drive, derailed by the allure of quick fixes and manipulative tactics. That’s why we’ve made it our mission to help projects like navigate these pitfalls.

Our consultants bring experience and expertise to the table. We understand the intricacies of the market, and we’re here to guide you toward sustainable success. Whether it’s evaluating potential partnerships, building authentic liquidity, or strategizing your token launch, we’re in your corner every step of the way.

Because at the end of the day, your project deserves more than smoke and mirrors. It deserves a foundation of integrity, trust, and real growth.

The Final Word

Crypto is a volatile space, and the temptation to chase shortcuts is strong. But as a founder, your job isn’t just to launch a token it’s to build something that lasts. Don’t let market makers or CEX packages distract you from that goal.

You’re not alone in this journey. With the right guidance and a commitment to transparency, you can rise above the noise and create a project that truly makes an impact.

If you’re ready to take that next step or if you just want to talk about your options we’re here to help. Reach out to ANSG. Together, we can navigate the challenges and build the future you’ve envisioned.

NFT, Crypto, Weeb3.0

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