Study Finds Almost No Crypto Protocols Disclose Market-Maker Terms

Why It Matters

Lack of transparency hampers investor confidence and may invite regulatory scrutiny, affecting capital flows into crypto projects.

Key Takeaways

• <1% of protocols disclose market‑maker agreements
• Only Meteora publicly detailed its market‑maker terms
• 91% generate revenue, but under 20% share updates
• DEXs and futures lead disclosure; L1s lag behind
• Opaque deals raise manipulation and liquidity risk concerns

Pulse Analysis

In traditional securities markets, market‑making contracts are routinely filed with regulators or disclosed in investor reports, giving traders and analysts insight into liquidity provision and potential conflicts of interest. Crypto projects, by contrast, operate in a largely unregulated arena where the terms of these arrangements are often hidden. Market makers play a pivotal role in ensuring token tradability, especially for newer assets lacking deep order books. When the underlying agreements are opaque, investors cannot assess whether token‑price movements are driven by organic demand or by pre‑arranged sell‑offs, eroding market integrity.

Novora’s comprehensive audit examined more than 150 protocols across decentralized exchanges, lending platforms, perpetual futures, layer‑1 and layer‑2 networks, bridges, and centralized‑exchange tokens, covering valuations from $40 million to $45 billion. Using a binary transparency framework and cross‑checking public sources such as Artemis, Token Terminal, Dune, DefiLlama and Blockworks Research, the firm found that only a single protocol—Meteora—explicitly disclosed its market‑maker terms. The broader investor‑relations gap is equally stark: while 91% of projects generate trackable revenue, merely 18% publish quarterly updates and only 8% issue token‑holder reports, indicating a wealth of data that remains unstructured.

The SEC’s recent enforcement actions against crypto market makers underscore the regulatory risk of undisclosed liquidity deals, especially the “loan‑option” model that can incentivize token dumping. As institutional capital increasingly seeks transparent exposure, projects that fail to reveal their market‑making contracts may face higher cost of capital or exclusion from mainstream funds. Industry stakeholders are calling for standardized reporting frameworks akin to those in public equities, which would align incentives, improve price discovery, and restore investor confidence. Until such norms take hold, the transparency gap identified by Novora will likely remain a focal point for both regulators and market participants.