1. Alpaca finance (Alpaca 🦙): an old token that isn’t popular.

In 2021, leveraging yield farming on Binance Smart Chain (BSC), the peak TVL (Total Value Locked) reached 2 billion dollars, a definite DeFi star. Unfortunately, good times didn’t last long; once the BSC craze faded, it felt like sliding down a slide, with the price consistently declining within a wedge channel. This year, I also bought a bit during the revival of BSC, hoping it would rebound, but the result? Not even a shadow of a rebound could be seen. The total market cap is only a pitiful 9 million U, and part of the circulating supply is still locked. I felt the market cap was too low compared to Meteorca. Moreover, at that time, CZ's determination to revive the BSC chain made me want to take a gamble.

So I bought in. Then it declined for a month, and when BSC also lost its heat, I sold it without giving it much thought.

Until March 30, the Binance team sent a delisting notice to the Alpaca project team, and everything began to get complicated. (if you know, you know)

2. 'Abnormal signals' before the delisting announcement.

On March 30, Alpaca's contract and spot trading volumes suddenly exploded! Contract trading volume reached 150 million, and spot trading was 12.35 million, while its total market cap was only 9 million! Given this comparison, don’t you feel something is off? A token with a market cap of less than 10 million has trading volumes that have increased several dozen times, clearly indicating that someone is 'controlling the supply' and 'funds are moving', while the price hasn't changed much, yet the trading volume keeps skyrocketing.

At this time, the operators may already know about the delisting news and start laying out their plan. What about retail investors? They are still in confusion, thinking this is just normal volatility. Who would have thought that the grand play would only begin at the last act—the so-called voting for delisting by Binance and the final announcement.

3. After the delisting announcement: the operator's conspiracy.

On April 24, Binance officially announced: Alpaca will be delisted on May 2! Once the news broke, the price of Alpaca instantly dropped from 0.0329 to 0.029, retail investors quickly sold off, and the market was filled with bearish sentiment. Everyone was shouting: 'Delisting = Crash, there's no negotiation!' Because in the past, delisting tokens always ended in a crash.

And the result? The price surged from 0.025 to 0.333, a 13-fold increase in just 3 days!

4. A precise deduction of the hunting path.

The operator's actions show a clear four-step progression:

1. Information arbitrage phase (March 30 - April 20).

After mastering the delisting notice on March 20, the main force began to acquire at low prices through block trades. At this time, the daily trading volume in the spot market was less than $500,000, with about $600,000 of liquid capital in a $9 million market cap. The operators only needed a million dollars to complete the control. On April 20: the operators tested the market, raising prices by 20%-30% to gauge the market's reaction.

2. Stress testing phase (April 20-24).

The 30% trial rally on April 20 had a dual purpose: to test the strength of market following orders while also inducing shorts to establish positions in the $0.03-$0.05 range. At this time, the funding rate began to occasionally show an abnormal negative value of -0.5%. On the day of the delisting announcement on April 24, retail investors frantically added short positions, pushing open interest (OI) to $62 million.

3. The death spiral begins (April 24-27).

The main force often chooses to violently raise prices one hour before the funding rate settlement, creating a contract funding fee of 2% per hour. The average daily funding rate reaches 48%! If you go short with 2x leverage, the margin for a day will be consumed by the fees, leading to immediate liquidation!

The two consecutive bullish candles on April 25-26 also made everyone see the true intention of the operators: first, a short squeeze, then collecting funding fees, followed by another round of short squeezes.

At the same time, they manipulated the news: On April 25, Alpaca's official announcement stated: 'Due to trading volume exceeding 1 billion, market makers requested a token issuance to maintain liquidity.' This operation was heavily criticized by the community and was ultimately canceled. However, many believed that the issuance was to dump on the exchange's spot market, so they opened short positions and ended up getting liquidated.

OI refers to the contract open interest and total value data:

April 24, 6.2 million.

On April 25, the value of positions and total value simultaneously skyrocketed to 11 million. On April 26, the value of positions and total value continued to soar to 26 million.

Starting from April 27, it has been declining all the way, now around 18 million.

5. Why are retail investors always hurt?

I have figured out this series of operations by Alpaca; retail investors have almost no chance of winning.

1. High volatility: In a 4-hour timeframe, there can be sudden 20%-40% bullish candles or large swings, even 2x leverage can't withstand it, let alone shorting.

For example, the spike at 0:00 on April 28 shows an amplitude of 65%. Both longs and shorts exploded.

2. Fee trap: the funding rate is outrageously high, going short for a day leads to liquidation, and retail investors have no time to react.

Information asymmetry: the operators knew about the delisting news in advance, while retail investors were kept in the dark, only able to follow market sentiment.

3. Indicators lag behind: although funding rates and open interest data can be observed, they often lag. For example, the OI and funding rate curves; at many times, the 1-hour K-line shows a decline, while the 5-minute and 30-minute lines are rising, completely tricking retail investors.

4. Still the fee trap:

The funding rate is outrageously high, you can go long. Yes, during the window from April 24-26, the probability of winning when going long was relatively high. But retail investors were afraid to take positions, which is similar to the logic of memes. As long as you dare to buy, they will gladly hand you the shares, since it's going to be delisted anyway!

'Who makes money in this circle? Of course, it's the exchanges and market makers! The hard-earned money of retail investors is their ATM.'

6. What’s the operator’s next step?

Now the price of ALPACA has retreated from its peak, and after April 27, the open interest began to decline, with market enthusiasm also cooling down. This can be seen from the OI data.

7. Lessons learned.

1. Don’t blindly follow the crowd to short: Delisting news is often a trap set by operators, diving in headfirst is just handing over your head.

2. Beware of funding rates: high fees are the harvesters for the operators, always calculate your costs before using leverage.

3. Since it's difficult to list new tokens, let's create a down-token concept. Binance will continue to harvest. Attention economy. Currently, attention is clearly focused on the secondary market.

This battle reveals deep vulnerabilities in the crypto derivatives market: when the funding rate mechanism combines with micro-capitalization, it creates a financial black hole similar to a 'gravitational singularity', where any rational pricing model will fail in this domain. The ultimate question left for the market is: what kind of derivative risk control system do we actually need? CEX charges funding rates far above traditional financial markets, with a staggering 1680% APY, is there still any constraint?