Overview
Recent scandals concerning Movement Labs’ MOVE and Mantra’s OM tokens have sparked a significant shift in the crypto market-making landscape. Market participants are now carefully reconsidering how liquidity is structured and who can be trusted.
Key Developments:
- There is increased scrutiny on crypto market-making practices following the revelations stemming from these scandals.
- Market makers are increasingly calling for transparency regarding token risk underwriting, preferring to ensure that all agreements and potential conflicts of interest are disclosed.
“These scandals have definitely changed trust dynamics between market makers and project teams, where trust is no longer assumed—it’s engineered,” - Zahreddine Touag, Head of Trading at Woorton.
The Impact of Scandals
Both Movement Labs and Mantra have experienced drastic declines in their respective tokens, uncovering hidden conflicts and dubious practices. For instance, the OM token’s value plummeted by over 90% in a matter of hours without a clear reason.
Unlike traditional markets, where transactional integrity is typically maintained through regulation, crypto market-making is fraught with risky private deals and opaque dealings. Market makers are now diligently examining token allocations and the conditions under which they operate.
Strategic Shifts
Following the scandals, strategies are evolving:
- Some firms like Metalpha are adjusting their risk assessments and focusing on long-term alliances rather than short-term gains, emphasizing transparent conduct.
- Increased legal diligence and clear enforcement mechanisms are becoming necessary components of market-making operations.
As institutions reinforce their trust protocols, the shift towards a more structured and transparent approach signifies an important evolution in the crypto landscape.
