Market maker deals are quietly killing crypto projects

Cryptocurrency projects often use market makers to boost liquidity and secure exchange listings, frequently employing a "loan option model." This involves lending tokens to market makers, who promise exchange listings in return for repayment at a higher price. However, many market makers exploit this model, dumping borrowed tokens to crash prices before buying back cheaply, profiting at the project's expense. Firms like DWF Labs and Wintermute, while prominent, have faced scrutiny regarding their practices, with DWF denying such tactics and Wintermute stating its profit-driven nature. The loan option model is not unique to large firms; smaller entities also offer similar deals, often framing them deceptively. Projects often lack full understanding of these agreements' downsides, leading to significant losses. Several projects utilizing this model experienced drastic price drops, illustrating the potential for harm. While the model isn't inherently flawed, poor structuring makes it exploitative, favoring informed parties. Concerns exist about exchanges' complicity and the lack of transparency, prompting calls for a "retainer model" offering greater project protection. Despite legal ambiguity, the loan option model's frequent association with token crashes necessitates greater accountability and transparency.