According to news from CoinWorld, a global survey involving over 2,000 cryptocurrency participants from 98 countries/regions found that 52% do not trust cryptocurrency market makers. The findings come from the report (State of Cryptocurrency Market Making - 2025), which also indicated that if market makers were judged for their impact on the ecosystem, 70% of respondents would 'join the lawsuit.' The complete 71-page report was independently commissioned by LO:TECH and has been made available 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 broader community a clearer understanding of how market-making relationships actually work. According to the study, 34% of cryptocurrency community members reported that they hold tokens in projects publicly collaborating with market makers and have incurred losses. Additionally, 67% indicated that increasing transparency around activities and fees would help improve trust. The report highlights structural risks within the protocols that support token liquidity. Token lending arrangements are often paired with call options in an 'options + loans' structure, emphasized as a major source of misaligned incentives. Poorly designed trades can lead to behaviors such as token dumping or price manipulation. These actions may protect the position of market makers but can harm the stability of the tokens. The report details how hedging strategies like delta hedging can create selling pressure during or shortly after token issuance, undermining early momentum. In more extreme cases, market makers can use options mechanisms to push token prices to profitable execution levels and then quickly sell positions. This could amount to a carefully orchestrated pump and dump amplified by trading terms. The authors call for a shift towards transparency and standardization in market-making arrangements. Suggested reforms include: survey data indicating a desire for reform. More than two-thirds of the cryptocurrency community indicated that increasing transparency would help rebuild trust, half believe regulation could play a role, but less than one-fifth believe it would be effective. While much of the report focuses on the industry's issues, it can also serve as a practical guide for token teams. It outlines methods for assessing market makers, setting performance KPIs, and weighing the pros and cons of different trading models. Nathan Worsley, co-founder and CEO of Euphoria, described the report as 'clear, grounded in first principles reasoning, and a must-read for anyone serious about market structure—especially those trying to understand how cryptocurrency market-making works, where it fails, and what is most important to founders.' Brandon Kumar, co-founder of Layer3, stated: 'As founders, navigating the market-making space often means making high-risk decisions with limited information. This report is one of the few truly helpful resources for reducing this asymmetry. It’s a valuable read for anyone looking to get smart quickly.' LO:TECH, which commissioned the study, is a London-based digital asset trading company providing market-making, market data, and OTC execution services. The company is dedicated to building a unified high-frequency trading infrastructure for centralized, decentralized, and traditional financial venues, focusing on transparency and KPI-driven performance. Its token market-making services allow clients to gain real-time insights into liquidity, including live order books, spreads, depth, KPIs, and cross-venue performance data. LO:TECH stated that this approach aims to address the trust gap identified in the report and distinguishes itself from the still-common covert or misaligned practices in the industry. Tim Meggs, CEO and co-founder of LO:TECH, stated in the report's preface: 'Clearly, there is much work to be done to repair this damage, and good market-making firms have a responsibility to work to improve the situation.' 'We commissioned this report to reveal the extent of the damage caused by bad actors and to provide resources for founders wanting to understand what good market makers should be doing.' The report can be fully downloaded at lo.tech/stateofmarketmaking. This post was commissioned by LO:TECH and does not serve as an endorsement or approval by The Block. This post is for informational purposes only and should not be relied upon as investment, tax, legal, or other advice. You should conduct your own research and consult independent advisors regarding the matters discussed in this article. Past performance of any asset does not guarantee future results.
