Here’s a dirty little secret in crypto token launches: the market makers who provide liquidity for your favorite new token often got their tokens for free. Well, nearly free. And they can sell them into your buy orders without you ever knowing the terms of the deal.

The arrangement is called a “token loan + call option” deal, and it works like this. A project hands a market maker a pile of tokens before or at listing, sometimes at zero upfront cost. The market maker provides liquidity on exchanges, but also retains the right to sell those tokens into market demand. The loan size, repayment conditions, and option strike prices? Those stay between the two parties.

The mechanics of a quiet dump

A detailed analysis published on July 28, 2026, by WuBlockchain laid out how these OTC arrangements have become standard operating procedure for market makers after token listings. The structure creates a textbook information asymmetry problem. Retail buyers see volume and liquidity and assume organic demand. What they don’t see is that a chunk of the circulating supply was loaned to a market maker who has every financial incentive to sell into that demand.

The call option component makes it even more lopsided. If the token price moons, the market maker can exercise the option and buy tokens at a pre-agreed price well below market. If the price tanks, they simply return whatever tokens remain.

The MOVE token, launched by Movement Labs in spring 2025, became a particularly instructive case when leaked documentation revealed the specific terms of its market-making agreements. Those leaks didn’t expose anything illegal. They exposed something arguably worse: that the arrangements everyone suspected were real were, in fact, exactly as one-sided as they looked.

Historical precedent and the Solana burn

The Solana Foundation dealt with its own version of this backlash back in May 2020, when community outrage over undisclosed loans to market makers forced a dramatic response. The foundation burned 11.36 million SOL, reducing total supply by 2.3%, essentially trying to undo the dilutive effect of tokens that had been quietly lent out.

Shane Molidor published an op-ed in Newsweek on June 10, 2026, arguing that projects should be required to publicly disclose their market-making terms. His case was straightforward: if investors can’t see the terms under which tokens are being lent and sold, they can’t accurately price the asset. Early trading gets distorted, and retail participants absorb losses that stem from information they never had access to.

The push isn’t just about fairness. It’s about whether token prices in the first days and weeks of trading reflect actual supply and demand, or a market maker’s contractual obligations.

Bringing loan details on-chain, where they’d be visible and verifiable, is one proposed solution. Smart contracts could encode the loan size, duration, option terms, and repayment schedule, giving anyone with an internet connection the ability to see exactly how much supply is sitting in a market maker’s wallet and under what conditions it can be sold.

Alternative models are already emerging

Bullish, the exchange backed by a multi-billion-dollar war chest, outlined a contrasting approach on its token services page published July 13, 2026. Instead of the standard loan-and-option structure, Bullish favors performance-based fees, where market makers are compensated based on measurable outcomes like spread tightness and uptime rather than being handed a bag of tokens to do with as they please.

What this means for investors

For anyone buying tokens in the first hours or days after a listing, the practical implication is simple: you might be on the wrong side of a trade you can’t fully evaluate. If a market maker holds a loan of, say, 5% of a token’s circulating supply with a call option attached, that’s material information. It affects price discovery, and right now, you don’t get to see it.

If projects begin publishing market-making terms, investors would gain the ability to factor those terms into their buying decisions. A token with a modest, short-term loan looks very different from one where 10% of supply is sitting in a market maker’s wallet with a 12-month option.

Given that the Solana Foundation was burning tokens over this exact issue six years ago and the industry still hasn’t adopted standardized disclosure, patience with the status quo appears to be running thin.