Below is a summarized version of The Block Research’s Strategic Selection: A Practical Guide to Choosing the Right Market Maker report. The full PDF version of this report is accessible here.
In crypto markets, where liquidity drives both perception and performance, market makers play a critical but often poorly understood role. While professional market makers are essential for maintaining orderly, liquid markets, the lack of transparency around their practices has made it difficult for projects to evaluate partners effectively. This report serves as a practical guide for token foundations and exchanges looking to navigate that decision with greater confidence.
The right partner can reduce slippage, dampen volatility, and help maintain tight spreads and deep order books across key trading venues. These conditions support organic trading activity and fair price discovery, while also signaling that the market is stable, well-functioning, and free from manipulation. This helps build trust among investors and encourages sustained participation over time. At the same time, poor market making, whether due to misaligned incentives, insufficient capital, or predatory practices, can damage investor confidence and undermine ecosystem growth. As such, selecting a market maker is one of the most consequential infrastructure decisions a token project can make.
This third report in our series provides a practical framework for choosing a liquidity provider to partner with. While the first report introduced market making fundamentals and the second examined liquidity’s quantitative impact on token performance, this report focuses on the selection process itself. Based on interviews with exchange operators, market makers, and token projects, we examine how to assess liquidity providers across five critical areas: reputation, technical capability, market specialization, operational discipline, and cost structure. This framework helps projects set realistic expectations, avoid common pitfalls, and structure effective long-term relationships.
We start by examining the strategic benefits market makers provide, including liquidity provision and broader ecosystem support. We then detail evaluation criteria for assessing providers, followed by a systematic due diligence process covering information requests, verification methods, and candidate screening. We provide specific frameworks for assessing liquidity capabilities and end with practical advice on structuring agreements and negotiating contracts.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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