On April 17th, according to Cointelegraph, suitable market makers can become boosters for cryptocurrency projects, helping them land on mainstream trading platforms, providing liquidity, and ensuring that tokens are tradable. In the field of market makers, a popular and often misunderstood model is called the "loan option model". In this mode, the project direction lends tokens to market makers, who then use these tokens to provide liquidity, stabilize prices, and assist the project in launching on an encrypted trading platform. But in reality, this model has become the "death sentence" for many new projects.
In the behind the scenes operation, some market makers are using this controversial token loan structure for their own profit. These protocols are often packaged as "low-risk, high return", but in fact, they will seriously hit the token price, causing chaos and struggle for the fledgling cryptocurrency team. According to Ariel Givner, founder of Givner Law, "Its operation is that market makers borrow tokens from project parties at a predetermined price, in exchange for which they promise to help these tokens go online on large trading platforms. If they fail to fulfill their commitment, they will need to repay these tokens at a higher price within a year
But in reality, it often happens that market makers sell borrowed tokens, triggering initial price drops. After the token price is smashed down, they repurchase the token at a low price and make profits from it.
