The market has been falling, and many altcoins have even fallen to the bottom. Many people believe that the bear market has arrived. The market adjustment period is often a stage of concentrated risk release, but it also contains opportunities for investors to improve their cognition and accumulate strength. Reviewing this round of market cycles, various bankers exit strategies are varied, and the carefully designed shipping methods are also worthy of our in-depth analysis.
Traditional market manipulation theory holds that the operation of bankers is nothing more than four stages: accumulation, price increase, wash-out, and delivery. However, the core essence is always the precise control of the emotions and behaviors of market participants. Through stock price fluctuations and the passage of time, bankers can subtly influence retail investors decisions and ultimately maximize their own interests.
So, in a complex and ever-changing market environment, how should retail investors effectively identify the signals of dealers selling? How should they improve their risk prevention awareness and avoid falling into traps? Based on community discussions, BlockBeats summarizes typical selling routines including unilateral liquidity pools, false repurchase benefits, spot control contract harvesting, and high-interest pledges for readers reference.
Add a unilateral liquidity pool and make money out of nothing
The most typical operation of this type of delivery method of unilateral liquidity pool is the LIBRA token that was supported by the Argentine president some time ago. The LIBRA project set up unilateral liquidity pools of LIBRA-USDC and LIBRA-SOL on the Meteora platform, that is, they only added LIBRA tokens to the pool without adding any counterparty assets such as USDC or SOL.
Image source: Bublemaps
The way a one-sided pool works is that if only SOL is added, then when the price of SOL rises, it is equivalent to continuously selling SOL in exchange for USDC. If only USDC is added, then SOL is continuously bought when the price of SOL falls. Applying this logic to LIBRA, since there is only LIBRA in the LIBRA pool, without USDC or SOL, any operation to buy LIBRA will directly push up the price, because there is no counterparty to sell, which creates the illusion of only rising but not falling in the early days.
Since the project team controlled most of the circulating LIBRA tokens in the early stage, they did not need to provide real stablecoins or ETH as counterparties like Uniswap and other platforms. The project team only needed to place buy orders for their LIBRA tokens at different prices. Since there were almost no sell orders in circulation in the market, these buy orders would be continuously executed, further pushing up the price and creating a false prosperity.
When the false prosperity attracts a large number of investors to enter the market, the price is pulled up to a high level, and there is enough capital injection, the project party will start the next step - withdrawing the pool. They quickly transfer the stablecoins or other assets that investors previously invested in purchasing LIBRA to the pre-set collection address. Due to the particularity of the unilateral liquidity pool, there are no assets available for redemption in the pool. Investors are actually unable to sell LIBRA at this time, and any new purchase operations will only further push up the price that has no actual support. The project party has also completed the shipment purpose at this time.
In addition to manipulating prices, the LIBRA project also took advantage of the custom fee function of the CLMM pool. In this way, it earned an additional fee of more than 10 to 20 million US dollars in the entire process, which is similar to the high fee of TRUMP at the time.
In addition, Mindao, founder of DeFi protocol dForce, analyzed that although Uniswap V3 also provides unilateral liquidity functions, its main purpose is to improve capital utilization and meet the needs of professional market makers. The key to LIBRA lies in its complex pool settings and high customization, which makes the original intention of the design of its unilateral liquidity pool not to provide liquidity, but to facilitate subsequent price manipulation and liquidity withdrawal.
Buyback is good but does not break through the sideways range
In August 2023, the GambleFi platform Rollbit, which had just completed TGE, officially announced that it would change the token economics. 10% of Casino revenue, 20% of Sportsbook revenue, and 30% of 1000x contract revenue would be used to repurchase and destroy RLB on a daily basis. After the release of this news, the token price was stimulated to rise, but after only two months, the token price has been falling. Community users gradually discovered that there was an unknown shipping operation behind it - the Rollbit team laundered the tokens through the Rollbit Hot Wallet, and then sold the tokens to the market through the algorithmic shipping address.
Buybacks are usually seen as a means for project parties to stabilize the market and increase the price of coins. Normally, the funds for buybacks should come from the project party’s profits or capital appreciation, but if these funds come from the project party’s “hot wallet” - an internal wallet used to store a large number of tokens or funds - then these funds are not external funds flowing into the market, but funds held in advance by the project party.
Assuming that the project party puts funds into the repurchase market through its own hot wallet, these funds actually belong to the project party. When the project party uses these funds to purchase tokens on the market, they may not be really destroyed or disappear, but return to the hands of the project party. Because the repurchased tokens may flow back to the algorithmic shipping address controlled by the project party through the hot wallet of the project party and enter the market again.
As token prices continue to fall, community members question the Rollbit team for not providing transparency across different chains and markets
The method of selling 30% of the goods and buying back 10% is bound to be unable to effectively increase the price of the currency. Instead, it is another shipment scam carefully deployed by the project party.
Spot control, contract short positions are frantically harvested
If you dont like it, you can short sell has become the most successful trading method in this round. Although the fees of new coins are often raised to the maximum, most secondary trading targets have experienced a few days of decline since the VC coin crusade, and then quickly rose, and then entered a long period of decline. Little do people know that this is also a way of shipping, the core of which is to take advantage of the lack of liquidity in the contract market and the psychology of retail investors chasing ups and downs.
The whole process can be summarized into several stages: First, in the early stage of the new currencys launch, market makers usually choose not to support the market, allowing retail investors who received airdrops in the early stage to sell off. The main purpose of this stage is to clean out short-term speculators and make room for subsequent operations.
Subsequently, market makers began to prepare for price increases and shipments. Prior to this, they would control spot chips as much as possible, reduce circulation, ensure that selling orders could not have a substantial impact on prices, and also limit the possibility of short sellers borrowing coins. When spot chips are firmly controlled, market makers can use relatively small amounts of funds to raise prices, and even trigger a short squeeze. When users choose to buy spot and open long contracts, they have accumulated enough buyers for the project party/market maker/institutional investor, and can ship in batches to start another harvest.
When the short positions in the market decrease and the price is pushed up to a certain level, market makers will start to use the contract market to harvest liquidity. They will quickly raise the price of the currency to attract retail investors to chase the rise and create a false prosperity. This wave of increase is usually considerable, but generally does not exceed the opening price. Subsequently, the open interest of the contract will increase significantly, and the funding rate will begin to turn negative, which is a signal that market makers have begun to establish short positions.
Finally, traders gradually sold off in the spot market. Although the profit from this part was limited, more importantly, they obtained sufficient exit liquidity through short selling in the contract market. A large number of retail investors became longs in the process of chasing the rise, providing counterparties for the shorts of market makers. As market makers continued to increase their short positions in the contract market and sold off in the spot market, the price of the currency began to fall, causing a large number of long positions to be liquidated, thus achieving double harvesting.
Small investors cannot play the pledge game
Once upon a time, the opening of a token for staking was seen as a positive release in the project’s operating rhythm. Its original intention was to encourage users to participate in network maintenance, reduce market circulation by locking up tokens, and enhance token scarcity. However, many project owners used this mechanism as a cover to sell their tokens for cash.
The project party attracts investors to lock up a large number of chips through high-interest staking rewards. On the surface, it hopes to stabilize the currency price by reducing the market circulation, but the actual result is often that most of the floating chips are trapped in the lock-up and cannot be withdrawn in time. In this process, the project party and the retail investors who choose to pledge are in an environment of information asymmetry. On the one hand, they can ship at will, and on the other hand, even if the project party or the big investors choose to pledge, they will reap high staking income and continue to dump the market.
In addition, there is another scenario where when the pledge period ends and investors start to sell tokens in panic, the project owner absorbs the chips at a low price and waits until the market sentiment stabilizes and the price rebounds before cashing out. At this time, investors flock in as the price rebounds, but the main force has already completed the shipment operation, leaving behind only the leeks who take over at a high price.
Looking at the above shipping methods, their essence is the precise control and game of market expectations and investor psychology. If retail investors want to survive in the ever-changing market, they need to have the mentality of a banker. The so-called psychology of a banker does not mean to manipulate the market like a banker, but to have the ability to think independently, not be swayed by market sentiment, be able to predict risks in advance, and formulate corresponding response strategies.
The market is an amplifier of emotions. Only by staying calm and rational can you avoid being harvested. Next time when you hear the words buyback, pledge or one-sided pool, you might as well be more vigilant, and perhaps you can avoid the traps carefully designed by the project party. What other shipping methods do you know in the comment area?
Reference Links:
https://x.com/MasonCanoe/status/1891364478572462296
https://x.com/kylopeung/status/1891063885911716341
https://x.com/Michael_Liu93/status/1830425923403059603
