Market Maker Term Sheets, Decoded
Every issuer eventually sees a market-maker term sheet that looks reasonable on the surface and collapses under scrutiny. This guide breaks down the levers that decide whether a programme produces real liquidity or just a wider spread.
- Common models
- Loan · Working capital · Hybrid
- Typical programme length
- 6–24 months
- Headline KPIs
- Spread · Depth · Uptime
- Rebate tiers
- Maker negative → 0 bps
Loan vs. working-capital models
A loan model gives the MM inventory plus an option on your token at a strike. A working-capital model pays for performance against KPIs without granting upside. Neither is universally better — alignment depends on float, expected volatility, and the venues being served.
Negotiating maker/taker economics
Venue rebates and fee tiers are far more negotiable than published schedules suggest, especially for issuers bringing organic flow. We benchmark against a live data set of APAC venues and structure the rebate stack so the MM is paid to be tight, not to be present.
KPI design that survives a regime change
A KPI that measures only spread will be hit by an empty book. We write spread × depth × uptime jointly, with reporting cadence and clawback conditions if performance drifts. The goal is a book that holds during the next risk-off window — not just during launch week.
Is a single MM enough, or do we need a panel?
For a single-venue listing, one credible MM can be enough. For multi-venue or cross-region programmes, a 2–3 firm panel reduces single-point-of-failure risk and improves price discovery.
What does a fair loan strike look like?
Strikes typically reference a trailing VWAP with a premium that compensates for borrow risk and lockup. We benchmark live and will walk away from strikes that misprice option value to the issuer.
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