In a loan + call option arrangement, the token issuer lends tokens to the market maker and issues call options on those tokens. The market maker deploys its own capital to provide buy-side liquidity and is compensated through the call option's optionality and gamma trading. The market maker defines the trading strategy, decides which exchanges to support, and assumes capital risk. This model aligns the market maker's upside with token performance but can create misaligned incentives if strikes are set unrealistically or if the market maker hedges aggressively.

In a retainer model, the token issuer loans both the native token and quote currency (e.g., USDC) to the market maker and pays a monthly fee for liquidity provision. The issuer and market maker jointly define the trading strategy, and the issuer selects which exchanges and liquidity levels to target. Capital risk is borne by the issuer, and remuneration is fixed rather than tied to token upside. Loan + call models may appeal when upside potential is high and the project wants to conserve stablecoins, whereas retainer models provide more predictable costs and greater control. Forgd can help projects model strike pricing, inventory size, and fee structures to select the optimal agreement.

To understand what Market Maker engagement model is best for your project, book a consultation with the advisory team.