In a recent discussion, Victor Ji, the co-founder of Manta Network, voiced his strong reservations regarding market makers and over-the-counter (OTC) trades. Ji highlighted that he routinely encounters proposals from market makers and OTC organizations looking to purchase or acquire tokens, which he invariably turns down.
He pointed out that both active and passive market makers can be detrimental to the overall health of blockchain projects. Ji accused them of neglecting the fundamental aspects of projects while being heavily involved in industry events and gatherings. According to Ji, these market makers are often financed by community resources, raising concerns about their genuine commitment to the projects involved.
He believes that their lack of attention to foundational principles could contribute to an accelerated decline of the industry. Instead, Ji advocates for authentic liquidity, which should ideally emerge from transactions driven by community participation. He stressed that the natural flow of market sentiment should dictate buying and selling practices. For market makers eager to engage, Ji recommended that they should consider purchasing tokens directly from the marketplace rather than relying on speculative acquisition offers.
Additionally, he provided suggestions for project founders who are anxious about liquidity issues. Ji proposed that they explore loan options rather than resorting to paying retainers, alluding to the importance of keeping loan sizes to a minimum. Reflecting on his experiences during the Polkadot epoch, particularly with Calamari, Ji recounted how market makers had previously requested more than 3% of tokens.
Despite their claims of working in good faith, these market makers turned around to sell the tokens, raising red flags about their reliability. Ji made a firm argument that legitimate loans should not surpass 0.2% of tokens, as this threshold would be adequate to ensure a significant market depth without the risk of token dumping, thereby safeguarding the interests of the community and ensuring long-term project viability..