Some market makers profit from token lending, potentially "killing" cryptocurrency projects

Some market makers are turning token lending into a profit machine and sending small crypto projects into a death spiral. It is reported that a market-making model known as the "loan option model" allows projects to lend tokens to market makers, who in turn use these tokens to provide liquidity, stabilize prices, and assist projects in launching crypto trading platforms. However, behind the scenes, some market makers are using this controversial token lending structure for their own benefit. These agreements are often packaged as "low risk, high reward", but in fact they can seriously hit the price of tokens, causing chaos and struggle for fledgling crypto teams.
Ariel Givner, founder of law firm Givner Law, said: "The way it works is that market makers borrow tokens from the project at a certain agreed price, in exchange they promise to help these tokens go live on a large trading platform, and if they fail to fulfill their promise, they need to repay these tokens at a higher price within a year." But what often happens in reality is that market makers dump borrowed tokens, triggering an initial price collapse. After the price of the tokens is smashed, they buy back the tokens at a low price to make a profit.