How Market Makers Maintain Price Stability: Technical Insights from Web3 Infrastructure

#webdev #blockchain #web3 #development

In crypto, price movements are often attributed to chart patterns or market sentiment. But beneath the surface lies a complex architecture of algorithms and market makers (MMs) that govern the real-time balance between liquidity, trust, and volatility.

During a recent technical workshop hosted by the Kumeka Team with Alex Momot, founder of Peanut Trade, a detailed walkthrough of modern market-making mechanics was presented. The session outlined how smart infrastructure and behavioral strategy—not just bid/ask spreads—are critical to maintaining token price stability.

Below are the key insights, tailored for those building, maintaining, or scaling Web3 infrastructure.

What Happens Behind the Price Chart

1. Market Making is Behavioral Infrastructure

A modern MM isn’t just narrowing spreads. They manage liquidity as a behavioral signal. When a market has consistent, tight spreads, it generates trust—both from traders and third-party data aggregators. This perception, in turn, attracts more volume.

2. DeFi Changed the Game: Welcome to the Age of Snipers

The rise of DEXs allowed open access to liquidity at the protocol level, spawning sniper bots that buy tokens in the very first block after launch. A new method, “friendly sniping,” involves pre-placing controlled buys before snipers to ensure stability and fair price discovery at launch.

3. Risk Management in Stablecoin Pairs

If a stablecoin like USDC drops temporarily to 0.90 in a USDC/USDT pair, an experienced MM might hold the peg manually rather than panic-sell. This approach requires trust with issuers (e.g., Circle) and solid internal risk controls.

The Tech Stack Behind Professional Market Makers

• Direct Exchange Access via FIX or WebSocket

Professional MMs use low-latency, direct APIs rather than traditional HTTP endpoints. FIX protocols, in particular, enable ultra-fast order execution with priority placement.

• Access to Latency-Sensitive Market-Making Programs

Top-tier exchanges such as WhiteBIT, Bybit, and OKX offer specialized programs to MMs—reduced fees, co-located infrastructure, and fast endpoints. These advantages help maintain consistent order books.

• Liquidity Placement at Scale

By operating across multiple pairs and exchanges, algorithmic MMs create synthetic depth and arbitrage protection. This enhances user experience without distorting natural trading flows.

How to Identify a Reliable Market Maker

• Request performance reports

Ask for profit-share or desk-level metrics showing what the MM earns without using your token supply.

• Check the connection protocols

If they’re only using HTTP or can’t explain FIX/WebSocket differences, that’s a red flag.

• Review contract structure

Avoid loan-based agreements that access >15% of your token supply. Prefer profit-sharing or fixed retainers for aligned incentives.

Why Community Still Matters

Despite infrastructure, the market is still moved by people. That’s why community education and event-driven engagement remain essential for token performance and holder confidence.

Here’s what Mark Lesiuk, co-founder of Kumeka Team, had to say:

“A good project must demonstrate that it's building value with the community, not off the community. You have to explain the 'why' and the 'how,' not just the 'what'. A committed community behaves like a dedicated guild or club—it drives activity and protects the market.”

Final Thoughts

Modern market-making is no longer a simple spread operation. It’s a hybrid discipline at the intersection of infrastructure, algorithm design, and user psychology.

If you're planning a token launch, relisting, or liquidity initiative, consider integrating: