• Diversify across multiple market makers, but within the same engagement type. Do not engage one retainer + working capital market maker and one loan + call option market maker — pick one engagement type and stick with it.
• Scale capital and token exposure gradually rather than committing everything upfront.
• Require transparent reporting on depth, utilization, and fills.
• Avoid structures that imply unrealistic FDVs, including heavily out-of-the-money ("OTM") strike prices on loan + call option tranches.
• Monitor behavior continuously rather than episodically.
• For retainer + working capital: Structure profit-sharing agreements relative to positive delta in the quote (stablecoin) inventory balance — not based on the marked-to-market value of the full trading inventory. This ensures the market maker is rewarded for intelligently growing the stablecoin position, not for passive token appreciation. Additionally, consider denominating a portion of integration and monthly fees in tokens to further align long-term interests.
• For loan + call option: Minimize the amount of tokens allocated to the market maker — only allocate what is absolutely necessary for liquidity provision. Diversify strike price methodology across fixed and dynamic (TWAP-based) approaches, and vary the time thresholds used for TWAP calculations. This limits the amount of "ammunition" the market maker has at any given point for potential short selling and incentivizes more predictable liquidity provision.

For a tailored risk assessment of your current or planned market making engagement, book a consultation with Forgd's advisory team.