How did the dealer shipped this round? Let’s see what pitfalls you have stepped on?

Author: shu, BlockBeats

The market has fallen continuously, and many altcoins have even fallen and cannot fall. Many people believe that the bear market has arrived. The market adjustment period is often a stage of concentrated release of risks, but it also contains opportunities for investors to improve their cognition and accumulate strength. Reviewing this round of market cycle, the exit strategies of various types of dealers are numerous, and the carefully designed shipment methods are also worthy of our in-depth analysis.

Traditional market manipulation theory believes that the operation of a dealer is nothing more than four stages: absorbing funds, pulling up, washing the market, and shipment. However, its core essence is always to accurately control the emotions and behavior of market participants. Through stock price fluctuations and time passage, the dealer can subtly influence retail investors' decisions and ultimately maximize their own interests.

So, in a complex and changeable market environment, how should retail investors effectively identify the shipment signal of the dealer? How to improve your own risk prevention awareness and avoid falling into traps? BlockBeats summarized typical shipment routines including unilateral liquidity pools, false repurchase benefits, spot control contract harvesting, high-interest pledge, etc. in combination with community discussions for readers' reference.

Add a one-sided liquidity pool and make money from nothing

The most typical operation of this type of shipment method is the LIBRA tokens from the Argentina presidential platform some time ago. The LIBRA project party set up LIBRA-USDC and LIBRA-SOL unilateral liquidity pools on the Meteora platform, that is, they only added LIBRA tokens to the pool, without adding any counterparty assets such as USDC or SOL.

Source: Bublemaps

The way a one-sided pool works is that if only SOL is added, then when the SOL price rises, it is equivalent to continuing to sell SOL and exchange it for USDC. If only USDC is added, continue to buy SOL when the SOL price falls. Apply this logic to LIBRA. Since there is only LIBRA in the LIBRA pool, no USDC or SOL, any operation to buy LIBRA will directly push up the price because there is no competitor to sell, which forms the early illusion of "only rise but not fall".

Since the project party controlled most of the LIBRA circulation tokens in the early stage, they did not need to provide real stablecoins or ETH as counterparts like platforms such as Uniswap. The project party only needs to place its own LIBRA tokens at different prices to pay. Since there are almost no circulating sell orders in the market, these buy orders will be continuously traded, further pushing up prices and creating false prosperity.

When the "false prosperity" attracts a large number of investors to enter the market, the price is pulled to a high level, and there is enough funds injected, the project party will start the next move - withdraw the pool. They quickly transfer stablecoins or other assets invested by previous investors when purchasing LIBRA to a pre-set collection address. Due to the particularity of the unilateral liquidity pool, there are no exchangeable assets in the pool, and investors are unable to actually sell LIBRA at this time, and any new buying operation will only further push up the price without actual support, and the project party has also achieved the purpose of shipment at this time.

In addition to manipulating prices, LIBRA project parties also utilize the custom handling fee function of the CLMM pool. In this way, he earned an additional fee of up to more than 10 million to 20 million US dollars throughout the process, which is similar to the high fees at TRUMP at that time.

In addition, Mindao, founder of the 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 the complex pool settings and highly customized it adopts, which makes the original design of its unilateral liquidity pool not to provide liquidity, but to facilitate subsequent price manipulation and liquidity extraction.

Repurchase benefits but does not break through the sideways

In August 2023, TGE's short-lived GambleFi platform Rollbit officially announced that it would change token economics, with 10% of Casino revenue, 20% of Sportsbook revenue and 30% of 1,000 times contract revenue to be used for daily repurchase and destruction of RLBs. The news released that the token price rose stimulusly, but the token price continued to fall in just two months. Community users gradually discovered that there was an unknown "shipping" operation hidden behind it - the Rollbit team laundered coins through Rollbit Hot Wallet, and then sold the tokens to the market through the algorithm shipment address.

Repurchase is usually regarded as a means for the project party to stabilize the market and increase the currency price. Under normal circumstances, the funds repurchased should come from the project party's profit or capital appreciation, but if these funds come from the project party's "hot wallet" -an internal wallet for storing a large amount of tokens or funds - then these funds are not external funds flowing into the market, but funds held by the project party in advance.

Assuming that the project party invests funds into the repurchase market through its own hot wallet, in fact, these funds belong to the project party itself. When the project party uses these funds to buy tokens on the market, they may not be really destroyed or disappeared, but return to the project party. Because the repurchased tokens may flow back to the algorithm shipment address they control through the project party's hot wallet and enter the market again.

Token prices keep falling, community members question the Rollbit team is not providing transparency on different chains and markets

The method of "sending 30% of the goods and repurchasing 10%" will inevitably not truly increase the currency price effectively, but it is another shipment scam carefully deployed by the project party.

Spot control, contract short orders are harvested in a crazy way

"If you don't like it, you can short" once became the most popular trading method in this round. Although the current new currency is often full of fees, since the "VC currency" attack, most secondary trading targets have experienced a few days of decline, then quickly rose, and then entered a long period of negative decline. Little do they know that this is also one of the methods of shipment, and the core lies in taking advantage of the current situation of the lack of liquidity in the contract market and the psychology of retail investors chasing ups and selling downs.

The entire process can be summarized into several stages: First, in the early stage of the new currency launch, market makers usually choose not to protect the market, allowing retail investors who have obtained airdrops to sell out early. The main purpose of this stage is to clean up short-term speculators and make room for subsequent operations.

Then, market makers began to prepare for lifting and shipment. Before this, they will control spot chips as much as possible, reduce circulation, ensure that the selling orders cannot have a substantial impact on the price, and also limit the possibility of short sellers borrowing coins. When spot chips are firmly controlled, market makers can use relatively little funds to raise prices, and even trigger short squeezes. When users choose to buy spot and open a long contract, they have accumulated enough buyers for project parties/market makers/institutional large investors and can ship in batches and start harvesting again.

When short positions in the market decrease and prices are pushed to a certain level, market makers begin 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 false prosperity. This wave of pull-up is usually considerable, but it generally does not exceed the opening price. Subsequently, the open position of the contract will increase significantly, while the capital rate will begin to turn negative, which is a signal that market makers begin to establish short positions.

Finally, traders are gradually selling in the spot market on the one hand. Although this part of the profit is limited, more importantly, they have obtained sufficient exit liquidity through short selling in the contract market. A large number of retail investors have become bulls in the process of chasing the rise, providing opponents for market makers' short sellers. As market makers continue to increase short positions in the contract market and sell in the spot market, the currency price begins to fall, resulting in a large number of long positions liquidating, thus achieving a double harvest.

Xiaosan can't play the pledge game

Once a token opening and pledge was regarded as a favorable release in the project operation rhythm. The original intention was to encourage users to participate in network maintenance, reduce market circulation through locking positions, and enhance token scarcity. However, many project parties used this mechanism as a cover to cash out shipments.

The project party attracts investors to lock a large number of chips through high interest pledge rewards. On the surface, it hopes to stabilize the price of the currency by reducing market circulation, but the actual result is often that most of the floating chips are trapped in the locked position 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 the goods at will. On the other hand, even if the project party or large-scale investors choose to pledge, they will also reap high pledge returns and continue to smash the market.

In addition, there is another script that when the pledge period ends and investors start to sell tokens in panic, the project party will absorb chips at a low price and wait until the market sentiment stabilizes and the price rebounds before cashing out. At this time, investors flocked in the appearance of price recovery, but the main force had already completed the shipment operation, leaving behind the leeks that took over at a high level.

Looking at the above shipping methods, all of them are precise control and game of market expectations and investor psychology. To survive in the unpredictable market, retail investors need to have the mentality of a market-maker. The so-called "manager's psychology" does not mean manipulating the market like a dealer, but rather having the ability to think independently, not being influenced by market sentiment, being able to predict risks in advance, and formulating corresponding response strategies.

The market is an amplifier of emotions. Only by staying calm and rational can one avoid becoming the object of harvest. Next time you hear the words "repurchase", "staking" or "unilateral pool", you might as well be more vigilant, and you may be able to avoid the "trap" carefully designed by the project party. In the comment section, you can tell me what other shipping methods do you know?