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Is DWF Labs' cryptocurrency marketing more successful than its market-making business? Project clients still give five-star ratings.

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Is DWF Labs

The operating model of the controversial market maker DWF Labs has been reported multiple times, with The Block citing various sources, DWF customers, and related documents, emphasizing DWF's focus on speculation and marketing rather than market-making.

Original article: "How DWF Labs makes deals and its tendency to talk about price"

The Controversial Emerging Market Maker DWF Labs

DWF Labs has made a name for itself in the crypto space, accumulating a significant amount of controversy in a short period of time:

  • BlockBeats interviews the controversial market maker DWF Labs: "We do not manipulate the market."

  • Controversial market maker DWF Labs criticized for not being qualified to be on the same stage, responds to industry criticism: "Don't cry."

  • $CYBER surges 150% in two days! Upbit holds 33% of the circulating supply, is market maker DWF behind it?

  • Market makers keep cutting! DWF Labs responds to baseless accusations, emphasizing the market downturn and the necessity to trade.

  • LD Capital Overview｜The truth behind the surge of small tokens, how to see through and leverage the business logic of market maker DWF

The Block's In-Depth Analysis of DWF Labs: Most Commonly Discuss Price with Project Teams

Foreign media The Block interviewed 16 customers and individuals familiar with DWF's operations. The key finding of the investigation is that, despite being a "market maker," DWF most commonly discusses price movements with potential clients and even current collaborative partners.

Within just 16 months, DWF has collaborated with 35% of the top thousand projects by market value:

  • Synthetix: $20 million investment agreement

  • EOS: $45 million

  • Conflux: $28 million

  • Fetch.AI: $40 million

  • Algorand: $50 million

However, for a young company, the substantial cash injection raises questions: How are these transactions integrated? Is everything as it seems on the surface?

It turns out that these collaborations are not agreements for financing, but rather DWF buying tokens from the project side and profiting from market making and aggressive price increases.

DWF Combines Marketing, Market Making, and Pumping to Drive Price Increases

Shortly after starting operations in September 2022, DWF established a marketing platform for clients, engaging in extensive discussions on price behavior in a data set called "Price Management," including:

  1. DWF claims to work in sync with clients' marketing teams to allow token prices to react relative to events.

  2. Prior to the release of "major news," DWF will imbalance the order book to drive price increases.

  3. DWF emphasizes to clients that they can provide "bullish sentiment, organic trading activity, and price improvements."

DWF explains to clients:

By passively operating on the order book in advance rather than actively trading, token price growth appears more authentic.

Furthermore, DWF frequently mentions terms like "bullish sentiment, organic trading activity, and price improvements" in proposals to clients. If clients are hesitant, DWF executives will start mentioning the token price increases of previous collaborative projects.

DWF Labs' Three Major Trading Practices

DWF Discount Token Purchases, Direct Cash-Out by Project Side

The Block points out that DWF focuses on three types of transactions: liquidity token investments, locked token investments, staking, and market making.

For liquidity token investments, DWF typically purchases a certain amount of tokens at a 5-15% market price discount, buying $100,000-150,000 worth daily and holding for over a month.

This allows project founders to effectively cash out through DWF while also gaining investment and exposure for the project.

An anonymous source familiar with DWF's operations stated:

DWF's OTC-like business has been a godsend for many small projects, allowing them to offload tokens, gain exposure, and claim project investments.

Anonymous project sources added:

This is a good method that doesn't directly sell tokens on the market.

DWF's Market Making and Trading

DWF typically provides market making services for over a year, involving token loans.

When obtaining a loan, DWF will have call options, a common feature of market making contracts. If the token price reaches a certain level, the strike price, the option can be exercised. This is to protect the market maker from losses due to token price increases during the service period.

In a market making proposal, DWF explicitly states that this helps with project and community interaction, encouraging employees to make relevant announcements and emphasizing "strike while the iron is hot."

Project Side: Very Satisfied with DWF's Services

The Block also gathered some positive feedback from DWF clients, including the Algorand Foundation, EOS Network Foundation, Floki, among others, all stating that DWF's almost 24/7 service has been very helpful and effective.

Synthetix declined to comment, Conflux and Fetch.ai did not respond.

DWF Labs similarly declined to comment or be interviewed.

DWF Co-founder Andrei Grachev chuckled at The Block's report, claiming to continue striving for growth and work.