How Do Market Makers Mitigate the Risk of Slippage When Quoting Large Crypto Option Blocks?

Market makers mitigate slippage risk by incorporating a "market impact cost" into their quote price for large blocks. They also try to execute their necessary hedges (e.g.

Delta hedge via the underlying crypto or futures) using smart order routing to minimize their own market footprint. Furthermore, they may only quote a portion of the requested size or seek internal cross-trades if they have offsetting inventory.

Faster execution technology also helps by reducing the time window for the market to move against them.