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The memory of retail investors lasts only 3 minutes, the more they are cut, the more fighting power they have, because human nature is to resist. Let's see how the big players harvest retail investors to make money.
01/ DEX Pool Manipulation
By controlling the liquidity pool (LP), they adjust token prices and trading depth. They may create price fluctuations by adding/removing liquidity.
The project party provides initial liquidity, and the market makers optimize LP operations through algorithms (such as dynamically adjusting price curves) to attract retail trading. Both parties may withdraw liquidity after a high point.
02/ Over-the-Counter Trading (OTC) and Low-Price Token Hoarding
Big players buy tokens in bulk from the project party at a discounted price through OTC trading, usually with no lock-up or short-term lock-up, at a very low cost.
Typically packaged as “strategic investment.” Acting as a “bridge,” they subsequently hype the price through market speculation (such as announcing collaborations or KOL promotions).
03/ Pump + Hype + Dump
Big players and project parties create hot narratives (such as “Metaverse” and “AI + Blockchain”) through traditional media, social media, and KOL promotions to attract retail funds. The actual progress of the project may be far less than advertised or even non-existent. Here are common operations:
- Push up token prices through concentrated buying to create the illusion of an uptrend.
- Release positive news in conjunction with media and KOLs to create market buzz.
- Various packaging and positive news released across the entire network (most dangerous time to enter).
- Provide liquidity support to ensure price stability and active trading.
- Retail investors begin to sell under the influence of FOMO emotions.
04/ High-Frequency Trading (HFT) and Algorithmic Arbitrage
Using high-frequency trading technology and proprietary algorithms, rapid buying and selling are conducted across multiple centralized and decentralized exchanges (60+ exchanges) to capture small price differences (bid-ask spread) for profit.
Real-time monitoring: Automated systems monitor market dynamics in real-time, executing limit orders to maintain market depth.
Collaboration with project parties: Project parties pay market-making fees or provide tokens, and DWF profits from price differences and trading volume.
Harvest point: Market makers sell off their inventory tokens after raising the price (usually obtained at low prices through private placements), while retail investors get trapped by buying at a high price.