The cost of a market maker is often misunderstood, especially by founders preparing for a token launch under time pressure.In this article, Maxim Moris, CEO and co-founder of Cicada, explains the three main market-making contract models used in the industry: retainer, loan, and so-called “free” market making. While these models can look similar on the surface, they create very different incentive structures and can lead to very different outcomes for a project.
The retainer model is the most transparent. A project pays a fixed monthly fee, while the market maker operates through the project’s exchange accounts without taking control of funds. In this setup, the incentives are clear: the market maker is paid for the service, and the project keeps control of assets and any trading upside generated on its own accounts.
The loan model works differently. In this case, the project lends tokens to the market maker, who then uses them as liquidity inventory. This structure can work in certain situations, especially for larger projects or specific exchange requirements, but it also changes the economic balance of the relationship. If founders do not fully understand how the agreement works, they may discover too late that the market maker can profit heavily from token price movements while the project carries the long-term reputational and market risk.
That is where “free” market making becomes dangerous. In practice, there is no such thing as free market making. If there is no visible invoice, the cost is usually embedded somewhere else: in token control, volatility profit, contract restrictions, or broader market impact. What appears cheaper upfront can become significantly more expensive over time.
The main point is not that one model is always good and another is always bad. The real issue is alignment. A healthy market-making relationship should reward both sides when the project performs well, not allow one side to profit while the other absorbs the damage. That is why founders need to understand exactly how the contract works before signing it, especially around token ownership, exit terms, and economic incentives.
For most projects preparing for listing, the real question is not whether a market maker should earn money. They should. The real question is whether the structure is balanced, transparent, and aligned with the project’s long-term success.
Watch the full video on YouTube
