Token loans granted to market makers by crypto projects are facing increasing scrutiny due to a lack of transparency around their terms. These agreements, which combine a token loan with a call option, allow market makers to sell tokens into market demand without retail investors knowing the extent of this selling pressure. The Solana Foundation had to burn 11.36 million SOL in May 2020, reducing total supply by 2.3 percent, to offset the dilutive effect of undisclosed loans. In response to this issue, voices are calling for these agreements to be made public, or even encoded in smart contracts on the blockchain. Some platforms like Bullish are proposing alternative models based on performance-based fees rather than token grants.
Source: Read the original article
