ChainCatcher reports, according to Cointelegraph, suitable market makers can serve as boosters for crypto projects, helping them list on mainstream exchanges, provide liquidity, and ensure token tradability. In the market maker field, a popular yet often misunderstood model is the "loan option model". Under this model, project parties lend tokens to market makers, who then use these tokens to provide liquidity, stabilize prices, and assist projects in listing on crypto exchanges. However, in reality, this model has become a "death sentence" for many new projects.
Behind the scenes, some market makers are exploiting this token loan structure for their own profit. These protocols are often packaged as "low-risk, high-return" but actually severely impact token prices, throwing newly established crypto teams into chaos and struggle. Ariel Givner, founder of Givner Law, states, "Their operation is: market makers borrow tokens from project parties at an agreed price, and in exchange, they promise to help these tokens list on major exchanges. If they fail to fulfill their promise, they must repay the tokens at a higher price within a year."
But what often happens in reality is that market makers sell the borrowed tokens, triggering an initial price crash. After driving down the token price, they then repurchase the tokens at a low price, profiting from the difference.
