A real-world scenario
Your asset is trading at $1, and your project announces positive news — anticipating a 20-30% increase in value.
Without market making, traders might take advantage of this trend, causing your coin to shoot up to $2-3, attracting even more market players. This is a pump. While it looks great initially, once the price reaches $5-6, those who organize the pump start selling, draining all liquidity. Then the price drops to $2-3 or even lower. This creates panic, and your initial investors, fearing loss, begin to sell as well — further depleting liquidity.
At this point, you face two options:
- Spend project funds to restore liquidity and regain investor trust.
- Watch as the asset fluctuates, potentially sinking further, which undermines confidence in your project.