Centralised market-makers generally structure their market-making agreements with projects very differently than the status quo for AMMs. AMMs make users provide both sides of the pair and provide them with native-token denominated yield. Centralised MMs receive zero-interest native token loans from the projects, with an option to purchase these tokens at some pre-defined valuation (generally some multiple of current valuation).This is a great deal for market-makers since they have limited price risk as they don’t have to actually buy the native token but simply provide the other side of the liquidity pair. At the same time, they get upside exposure since they’re able to buy the tokens at a valuation later on. This is also good for the project because they don’t have to distribute a lot of tokens while the price is low, replacing this with a contingent liability which they only have to pay out if they succeed.

How could this work? The liquidity auction would go on for a week. The project would offer up X% of token supply, which would be structured as a 1 year loan to MM’s who provide the USDC. Anyone would be able to participate during this one week period. MMs who participate would also receive a pro-rata warrant to purchase X% of token supply at some valuation, which itself could be determined by the amount of participation in the auction (with some lower bound at which the auction reverts). The warrant would unlock linearly over the period of the loan. Once the week finishes, loaned tokens + USDC are locked in the AMM for 1 year. Users can pull out at any time by paying back the native token loan, receiving their pro-rata share of LP shares. If they pull out, the unvested portion of the warrant is burned.