How do Retainer + Working Capital market makers intend to profit from engagements?

Retainer plus working capital market makers typically profit in three primary ways: monthly service fees, one-time setup fees, and performance-based profit share.

Understanding these mechanisms is critical, because unlike loan plus call option structures, retainer models do not rely on embedded optionality. Instead, the market maker is compensated either through fixed fees, performance participation, or a combination of both.

1. Monthly Service Fees (Most Common):

The most common profit mechanism is a recurring monthly retainer. There are two typical pricing models:

Per-Exchange Pricing: Some market makers charge on a per-exchange basis. Typical range: $1,000 to $4,000 per exchange per month

Example:

Coverage across 4 exchanges
Monthly cost ranges from $4,000 to $16,000

This model scales linearly with exchange coverage.

Flat Monthly Fee (Unlimited Exchanges): Other market makers charge a flat monthly fee that covers unlimited exchange support. Typical range: $5,000 to $15,000 per month

The practical limitation is not exchange count, but inventory. The number of exchanges that can be meaningfully supported depends on the amount of working capital — both stablecoins and tokens — that the project allocates.

In this structure, the market maker earns predictable revenue regardless of performance.

2. One-Time Setup or Integration Fees:

Less common, but still seen in the market, are one-time onboarding fees. Typical range is $5,000 to $50,000. These fees are charged for:

Strategic planning
Infrastructure setup
Exchange integrations
Internal risk configuration

While not universal, they are more common among firms that position themselves as infrastructure-heavy or highly customized.

3. Profit Share (Performance-Based Upside):

The third — and often most important — profit mechanism is performance participation through a profit share. In a retainer plus working capital structure, the market maker operates using inventory provided by the project. This working capital consists of both stablecoins and tokens. In this sense, the market maker functions similarly to an asset manager. If they grow the value of that inventory, they share in the upside.

There are two primary methodologies for calculating profit share:

A. Net Asset Value (NAV) Based Profit Share (Most Common): This method measures the change in total working capital value from the start of the engagement to the end.

Formula:

End NAV minus Start NAV equals Profit

Market maker share typically ranges from 5% to 20%

Example:

Initial working capital: $1,000,000
End working capital value: $2,000,000
Profit: $1,000,000
Profit share at 10% = $100,000

NAV captures:

Increase in stablecoin quantity
Increase in token quantity
Increase in USD value of token holdings

This structure incentivizes holistic portfolio management. The market maker benefits from intelligently managing both sides of the book.

B. Positive Quote Delta (Less Common): This methodology measures only the increase in stablecoin balance over time. It ignores token quantity changes.

Example:

Start: 500,000 stablecoins + $500,000 worth of tokens
End: 1,000,000 stablecoins
Stablecoin increase: $500,000
Profit share at 15% = $75,000

Under this model:

Only stablecoin growth counts as profit
Token appreciation alone does not trigger profit share

This structure exclusively incentivizes stablecoin accumulation. That may encourage more aggressive token selling, since converting tokens to stablecoins directly increases measured profit.