Altcoin market making (near free money)
1: Offer “no upfront cash” market making. Founder lends tokens + grants a call option (they can return the tokens later or buy them at a preset strike price)
2: Pump to attract retail & short perp
3: Dump all borrowed tokens
4: Buy back 90% cheaper, return tokens to founder & pocket difference
If the price pumps above the strik anyways, they can exercise the call
Limits their exposure to having to buy back at a higher market price, subject to the contract’s timing and terms
Agreed strike: $0.10/token
Price after rally/pump/squeeze: $0.50
MM exercises: pays the project $0.10 per token, rather than returning those tokens or buying at $0.50
Not saying wintermute does structured loan market making over retainer but most market making deals are a scam
"Market makers are delta neutral they don't care about price" is a psyop
Delta neutral on which positions? at what moment? You have token loans, call options & a thin order book
Firms/funds stating they're market maker doesn’t prove they're neutral & hedging their exposure doesn’t mean they aren’t moving the price
Btw I haven't seen the full clip but been surprised larger accounts usually go with the psyop
Mando explains how market makers use your own coin to destroy you
"This is what Wintermute does all day. They get sold 2-3% of a coin by the team or one big holder, then they take a position in perps and spend the whole day running people up and smashing it lower, running people up and smashing it lower. They're delta neutral but delta neutral means they can move the market. If you have 2-3% percent of any coin you can just destroy people on-chain."
"They'll give you a price for anything, they're never the cheapest but they'll always give you a price. If you want to get out of 3% or 5% of a meme coin they'll take it, and then they make a ton of money playing the perps on the back of that. So if you're new this cycle, a market maker owning your coin is not a good thing, particularly if it has perps."