Market-making structures, explained

The issuer pays a recurring fee for defined liquidity and market-operations services. The agreement should state who supplies inventory, which venues are covered and how performance is measured.

A retainer can make cost visible, but the fee alone says little about depth, uptime or execution quality.

The issuer lends tokens for a fixed period so the provider can quote and manage inventory. Terms should cover quantity, permitted use, collateral if any, return mechanics, defaults and early termination.

Confirm how the provider manages price, counterparty and venue risk.

Some engagements combine a fee, token inventory, options or performance-linked terms. Model the economics across several market conditions rather than relying on the base case.

Ask counsel and finance owners to review incentives, accounting, control and regulatory implications.

Agree the measurement source and report spread, depth at defined price bands, uptime, slippage and inventory by venue. Avoid volume targets that could reward low-quality or misleading activity.

The contract should prohibit manipulation, wash trading and undisclosed conflicts, with clear escalation and termination rights.