Only 1 of 150 Crypto Protocols Discloses Market-Maker Terms

A Novora research study has exposed a significant transparency failure in the digital asset sector, finding that only one out of 150 examined crypto protocols publicly discloses its market-making arrangements. Despite 91% of these protocols generating revenue, Meteora stands as the sole entity providing clear visibility into how it manages liquidity and market-making partnerships.

The Transparency Deficit

The findings highlight a structural issue in how decentralized finance protocols interact with liquidity providers. Market-making agreements often involve complex arrangements, including token grants, performance-based incentives, and fee-sharing structures. When these terms remain private, market participants are left to guess the extent of potential sell-side pressure or artificial volume inflation. The lack of disclosure suggests that many governance tokens may be subject to hidden dilution or influence from undisclosed third-party liquidity providers.

For investors, the absence of standardized reporting makes it difficult to distinguish between organic protocol growth and volume generated by subsidized liquidity. While transparency is a core tenet of blockchain technology, the business operations of the underlying protocols remain opaque. This disconnect creates a blind spot for traders who rely on on-chain data to gauge the health of a project.

Market Impact and Counterparty Risk

Market-makers play a critical role in narrowing spreads and ensuring price stability, but their incentives can diverge from those of token holders. When agreements are kept behind closed doors, the risk of wash trading or predatory liquidity practices increases. Traders should consider the following risks associated with this lack of disclosure: