Analysis of Monad's 18-page Sales Document: How Does 0.16% Market Making Allocation Support a $2.5 Billion FDV?

Original Title: "How to View Monad's Market Making Arrangements? 18-Page Document Reveals These Core Details"

Original Author: KarenZ, Foresight News

As the Monad (MON) token is about to be listed on Coinbase and enters the final countdown to public trading, its recently released 18-page disclosure document has become a market focal point.

This document, provided by Monad Foundation’s subsidiary MF Services (BVI), Ltd., offers a comprehensive overview of Monad, covering everything from project structure and financing, to token allocation and sales rules, as well as transparent market maker information and security risk warnings. It provides investors with the key information necessary for informed decision-making and demonstrates the project team's commitment to operational transparency.

In addition to widely cited key data such as "2.5 billions USD FDV," "unit price of $0.025," and "7.5% public allocation," the document also systematically discloses important details such as legal pricing, token release schedule, market making arrangements, and risk warnings that should not be overlooked.

Of particular note, the document devotes considerable space to systematically listing multi-dimensional risks related to token allocation, the Monad Foundation, MON tokens, the Monad project, and its underlying technology. For users interested in investing in MONAD tokens, it is recommended to thoroughly study this document and make rational investment choices.

Legal Structure

The Monad Foundation is going public on Coinbase through its subsidiary MF Services (BVI) Ltd. MF Services (BVI) Ltd. is a wholly-owned subsidiary of the Monad Foundation, registered in the British Virgin Islands, and is the seller for this token sale. The Monad Foundation is the sole director of MF Services (BVI).

Core Development Entities and $262 Million Financing Details

· Monad’s core contributors are the Monad Foundation and Category Labs, Inc. (formerly Monad Labs, Inc.).

· The Monad Foundation is a Cayman Islands foundation company dedicated to supporting the development, decentralization, security, and application promotion of the Monad network by providing a range of services including community engagement, business development, developer and user education, and marketing. Category Labs is headquartered in New York and provides core development services for the Monad client.

· Monad’s three co-founders are James Hunsaker (CEO of Category Labs), Keone Hon, and Eunice Giarta. The latter two serve as co-GMs of the Monad Foundation.

· The Monad Foundation is overseen by a board of directors, consisting of Petrus Basson, Keone Hon, and Marc Piano.

· Financing timeline:

1. Pre-Seed: Raised $19.6 million from June to December 2022;

2. Seed Round: Raised $22.6 million from January to March 2024;

3. Series A: Raised $220.5 million from March to August 2024;

· In 2024, the Monad Foundation received a $90 million donation from Category Labs to cover operating expenses for 2024-2026. This donation is part of the $262 million raised by Monad Labs in all financing rounds.

Key Information on Sale Terms

· Token allocation period: November 17, 2025, 22:00 (UTC+8) to November 23, 10:00 (UTC+8).

· Token allocation ratio: Up to 750 million MON (7.5% of initial total supply). Price: $0.025 per MON. If fully allocated, $187.5 million will be raised.

· Minimum subscription is $100, maximum is $100,000 (Coinbase One members may enjoy higher limits according to platform terms).

· FDV: $2.5 billions

· "Bottom-up" oversubscription allocation: To ensure broad distribution and prevent whale monopolization, the document discloses a "bottom-up fill" mechanism. In the event of oversubscription, this mechanism aims to maximize broad allocation among participants while limiting asset concentration among large buyers.

· Example: For a 1,000-token allocation: three users (small/medium/large) apply for 100/500/1000 tokens respectively. In the first round, each receives 100 tokens (700 remaining, low-amount user fully satisfied). In the second round, the remaining 700 tokens are split equally between the medium and large users, each getting 350. Final allocation: small 100, medium 450, large 450.

Token Allocation and Release

The MON tokenomics model is shown below:

The following chart shows the expected token release schedule:

Overall, on the first day of Monad mainnet public launch, about 4.94 billion MON tokens (49.4%) will be unlocked. Of these, about 1.08 billion MON tokens (10.8% of initial total supply) are expected to enter circulation through public allocation and airdrops, and about 3.85 billion MON tokens (38.5%) will be allocated for ecosystem development. Although these tokens are unlocked, they will be managed by the Monad Foundation and will be used for grants or incentives at the strategic level over the coming years, as well as delegated according to the foundation’s validator delegation plan.

All tokens for investors, team members, and the Category Labs treasury will be locked on the first day of Monad mainnet public launch and will follow a clear unlocking and release schedule. These tokens will be locked for at least one year. All locked tokens in the initial supply are expected to be fully unlocked before the fourth anniversary of the Monad mainnet public launch (Q4 2029). Locked tokens cannot be staked.

It is worth noting that the document indicates that in the future, after the network launch, the Monad Foundation may continue to conduct airdrops to incentivize exploration and use of applications and protocols within the Monad network and ecosystem.

Future Supply: 2% Annual Inflation + Fee Deflation

· Inflation: Each block generates 25 new MON as rewards for validators/stakers, with annual inflation of about 200 million (2% of initial total supply), aiming to incentivize network participants and ensure network security.

· Deflation: All base transaction fees (Base Fee) are burned. This mechanism offsets some inflationary pressure by reducing circulating supply.

Monad Market Making and Liquidity Arrangements

To ensure good liquidity after the token is listed and to achieve transparency, MF Services (BVI) Ltd. has disclosed detailed market maker cooperation and liquidity support plans.

MF Services (BVI) Ltd. has signed loan agreements with five market makers: CyantArb, Auros, Galaxy, GSR, and Wintermute, lending a total of 160 million MON tokens. The loan terms for CyantArb, Auros, Galaxy, and GSR are one month (renewable monthly); Wintermute’s loan term is one year. In addition, a third-party institution, Coinwatch, will monitor the use of the lent tokens to ensure that funds are used to enhance market liquidity and not for illegal operations.

In addition, MF Services (BVI) may deploy up to 0.2% of the initial MON token supply as initial liquidity for DEX pools.

How to View Monad's Market Making Arrangements?

Openness and Transparency

In the Web3 space, the transparency and rationality of market making arrangements have always been a core concern for the market. Traditional projects often trigger investor trust crises due to non-disclosure of market maker information. However, the market making details disclosed by Monad in the Coinbase token allocation, with transparency at its core, break industry convention.

Furthermore, monitoring by Coinwatch will maximize assurance that the loaned tokens are genuinely used for market making, indicating the project's emphasis on compliant operations.

Cautious Structural Design

The four market makers have one-month loan terms with monthly renewals, while only Wintermute provides a one-year commitment. This structure reflects Monad’s cautious approach:

· Flexibility: Short-term contracts allow the project to adjust market making arrangements flexibly based on market conditions. If a market maker underperforms, the contract may not be renewed at month-end.

· Risk Hedging: Wintermute’s one-year commitment provides a stable long-term foundation for market liquidity.

This combination shows the project aims to ensure initial liquidity without over-relying on any single market maker or committing to excessively long terms.

Prudent Market Making Loan Scale

Relative to the total supply of 10 billion, the 160 million tokens lent for market making account for only 0.16%. This very small proportion may be due to:

· Avoiding excessive market intervention

· Controlling token dilution

· Market-driven considerations: Maintaining price stability through real trading demand rather than excessive market making.

Additionally, the foundation will use up to 0.2% (200 million tokens) for initial DEX liquidity, further demonstrating this prudence.

Potential Risks

However, from Monad’s 18-page document, it is clear that the project has struck a very conservative, even cautious, balance between "initial price discovery" and "long-term decentralization."

At the current pre-market price of $0.0517, these market making loaned funds are worth only $8.27 million. Compared to many projects with 2–3% "market making quotas," this may not be enough to support liquidity in the face of significant selling pressure.

Moreover, the foundation will use up to 0.2% (200 million tokens) for initial DEX liquidity, and it is stated as "may" rather than "must." This scale can only ensure that there is no liquidity vacuum at the opening, but cannot support sustained depth. The official document also warns of DEX and CEX liquidity risks, effectively preemptively disclaiming responsibility.

For investors, this means that if there is not enough natural trading depth and organic buying support after MON tokens go live, prices may experience high volatility. Therefore, when participating in investment, in addition to focusing on the project's fundamentals and long-term vision, it is wise to remain alert to the initial market liquidity situation and price discovery mechanisms.

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