John Gu – Crypto Market Making & The Cold Start Problem (S7E30)

The "cold start" problem in crypto markets presents a unique challenge where new tokens launch without the traditional scaffolding of reference prices, comparables, or regulatory infrastructure. John Gu, founder and CEO of Caladan, explains how market makers bootstrap liquidity from zero by quoting two-sided markets into the void and evolving their playbooks as markets mature. Effective liquidity provision requires balancing inventory risk, managing delta-hedging strategies, and navigating adversarial environments prone to spoofing and liquidation cascades. Beyond market making, token foundations increasingly utilize bespoke OTC structured products to manage treasury runway and generate yield without signaling negative market sentiment. Ultimately, the sustainability of a tokenized project relies on genuine economic value and revenue generation, as the token price often acts as a reflexive marketing tool that influences user behavior and protocol adoption.