Jul 26, 2024
3 min
In the fast-evolving world of cryptocurrency, the strategic partnership with a market maker can make or break the launch and sustainability of a new token. Choosing the correct market making model is crucial for the liquidity and stability of your project. This article will outline the two primary models—Retainer and Loan—highlighting their operational frameworks, advantages, and risks, supplemented by a comparison table to aid in making an informed decision.
In the retainer model, your project hires a market maker by providing them with both tokens and a paired stablecoin. This model is akin to a partnership, where the market maker uses these assets to ensure liquidity on various trading platforms.
Conversely, the loan model involves your project loaning tokens to a market maker, who then uses their own capital to facilitate market liquidity. This model is more hands-off from the project's perspective but comes with increased risks due to potential misaligned incentives.
No upfront fees; the market maker operates independently.
Market maker uses loaned tokens to manage liquidity, aiming for profitability in trading activities.
To better visualize the differences and make a well-informed choice, here is a detailed comparison of both models:
When deciding between the retainer and loan models, consider your project’s stage, available funding, and strategic goals. Established projects with sufficient resources may benefit from the retainer model’s stability and partnership-oriented approach. Emerging projects seeking immediate liquidity with limited funds might find the loan model attractive despite its risks.
CLS Global offers bespoke market-making solutions that cater to the unique needs of each project. Leveraging advanced trading algorithms and a comprehensive network of partnerships, we ensure optimal market making strategies, whether you require a dedicated retainer service or a strategic loan arrangement. Our commitment is to guide your project to success in the dynamic crypto marketplace.
Choosing the appropriate market-making model is essential for the long-term liquidity and health of your token. With our expertise, CLS Global is ready to help you navigate these choices for maximum impact.
