Does a market maker becoming a large holder necessarily mean they participated in market making?
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Does a market maker becoming a large holder necessarily mean they participated in market making?
How to determine if market makers are genuinely participating in market making?
Navigating Web3 tides with focused insightsBy Ai Auntie
This morning I saw the breaking news: "Wintermute becomes the third-largest holder of $GOAT, holding 1% of total supply." But just as airdropping tokens to Vitalik Buterin is a marketing tactic, airdropping to market makers isn't new either.
So here comes the question:
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How can we tell if a market maker is genuinely participating?
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Examples of genuine market-making participation
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Examples used purely for promotion
1/ Take GOAT as an example
1. Verification: It's true that 10 million GOAT tokens are held in the correct contract address. Don't underestimate this step—some projects falsely claim market maker involvement using similarly named tokens.
2. Identify fund sources: Tracing backwards, four addresses transferred several million tokens each to 7GNPT…snUM1. All four are early high-return addresses, having cumulatively profited $11.63 million!
The four early-entry addresses that sent tokens to Wintermute:
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3kjF7ZXfMYo1dqxFNE7WVtQ38zZSciptu1deWYibre1m (origin buy-in address of CAnS7...JZT86)
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BNPntzDuH7EofLrHGA7gjbeNvJQbEvvrGrCPCTCNXf7v
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9pLzvD3s5g7nWbMbURPvYQgHp4piosoVLrxiEgr58v3d
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EUES49UdAkevnREj5YShNXpWjX5DN44uCJQo7yfaggot
3. Check market maker activity: After receiving the tokens, two actions were taken—first, transferring 1 token to Wintermute1 and immediately sending it back, a clear address verification move; second, distributing all tokens via two intermediate transfers to the Wintermute3 address.
At this point, it’s evident that Wintermute is actively involved in GOAT market making. Whether this was an OTC purchase, project-team-directed, or self-initiated remains unclear.
4. Continued monitoring: Ultimately, we need to see whether Wintermute3 conducts frequent GOAT trades. If so, confirmation is solid.
2/ Example of genuine market-making participation
Wintermute's involvement in uppercase $NEIRO: It once held 4.35% of total supply and briefly became the largest holder. After receiving tokens, it actively traded across major exchanges and DEXs.
4/ Example of purely promotional use
This type typically has several characteristics:
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Tokens directly airdropped by the project team or devs
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Often simultaneously airdropped to well-known figures like Vitalik Buterin and Sun Yuchen
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No activity after receipt by market makers (Vitalik may even sell immediately)
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Hyped loudly in community as proof of institutional market-making involvement
Due to potential comparisons, I won’t name specific cases here—feel free to check them against these traits yourself.
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