In a thread on X this morning, Synthetix founder Kain Warwick offered a stark look into the inner workings of crypto market makers (MMs) and their evolution over the years. Warwick recounted his personal experiences, both favorable and unfavorable, with various MMs in the space and highlighted how some have resorted to dubious practices—particularly during and after the ICO boom.
Crypto Market Makers Exploiting Projects And Traders
Warwick began by recalling the initial market conditions during the 2017 Initial Coin Offering (ICO) era, stating that it was then “practically impossible to raise without having a deal in place with several ‘market makers.’” The monthly cost for such arrangements, he noted, could reach as high as “$50k–$300k+.” Despite high costs, these deals were considered essential for attracting large investors and securing listings on prominent exchanges.
However, Warwick emphasized that some MMs quickly pivoted to questionable activities, which often resulted in being barred from top-tier exchanges. “Even by late 2017 Binance was kicking them off the exchange regularly for various shenanigans,” he wrote. He described how these MMs manipulated volumes on less reputable (or “tier 3”) exchanges through crossing orders with themselves—a strategy he claims they could not replicate on platforms like Binance or Kraken.
One of the major evolutions in market-making arrangements, according to Warwick, was the adoption of call option structures. He pinpointed that “many ‘market makers’ just yolo pumped tokens, exercised the calls and dumped everything,” contrasting them with “good market makers” who “aim for tight spreads” and remain “delta neutral.” Euro calls, he explained, are less prone to manipulation than American calls because of their exercise restrictions. In Warwick’s words, “American calls were mostly for extraction.”
He further traced the rise of “low float meta,” attributing its popularization to Sam Bankman-Fried (SBF) and describing how some MMs and funds exploit discounted tokens for “exit liquidity.” With fewer tokens circulating, price surges become easier to engineer, and those holding large blocks can “short the top on TGE, cover at the bottom and then pump it into low liquidity later.”
Warwick also referenced his prior dealings with DWF Labs, revealing that Synthetix “was the first project to be grifted by DWF Labs.” He contended that while such deals may help a project’s treasury in the short term, they often harm the token and community over the long run.
In his closing remarks, Warwick urged market participants to scrutinize token transfers carefully. “Be very wary if you see a huge block of tokens sent to a ‘market maker,’ they are likely just prepping you as exit liquidity,” he warned, calling for greater “transparency” and heightened skepticism when confronted with sudden liquidity spikes and behind-the-scenes deals.
Although Warwick acknowledged that the environment today differs from the ICO heyday, his statements highlight ongoing concerns over questionable market maker practices—reminding both projects and investors to remain vigilant.
At press time, the total crypto market cap was at $2.83 trillion.
