Liquidity pools are important tools for trading tokens, enabling token swaps without traditional order books through the AMM mechanism, providing liquidity to the market. However, this mechanism also offers opportunities for token developers (DEV) or whales to manipulate the market covertly, with 'unilateral pool selling' being a common and efficient selling technique frequently seen in MEME coins like $TRUMP, $LIBRA, Melania, etc. This article will briefly analyze the specific steps, principles, advantages, and methods for recognizing and preventing unilateral pool selling by DEV.

1. What is unilateral pool selling?

Unilateral pool selling refers to when DEV or whales create a liquidity pool on a decentralized exchange (like Raydium) by depositing only one type of token (usually their own created or held target token, such as $TRUMP), without depositing paired tokens (like SOL), and setting the pool's price range higher or lower than the current market price. Then, by pumping or hyping the market, they adjust the token price into the range that activates the pool, allowing retail investors to buy at high prices, thereby gradually clearing out their tokens and profiting. This technique is covert and efficient, commonly used in the MEME coin market due to its volatile prices and high retail participation.

2. Specific steps for unilateral pool selling

The following is a detailed operational process of DEV's unilateral pool selling, using $TRUMP as an example:

1. Create a unilateral pool

  • Operation: DEV creates a liquidity pool on Raydium, selecting the target token $TRUMP as the only deposited token, without adding a paired token (like SOL).

  • Price range setting: DEV sets the price range of the pool significantly above the current market price. For example, if the current market price of $TRUMP is 6 SOL, DEV may set the pool price range to 9-11 SOL.

  • Logic: Since the pool's price range is above the current market price, the pool cannot directly process transactions at the current price (i.e., it cannot accept buys below 9 SOL or sells above 11 SOL). This puts the pool in a 'dormant' state until the price reaches the specified range.

2. Pump the market price

  • Operation: DEV uses its own funds or market manipulation techniques (like pumping through buy orders, creating false trading volume, spreading good news) to push the price of $TRUMP up until it reaches the price range set by the pool (like 10 SOL).

  • Tools and methods:

    • Make large purchases on Raydium or other DEXs to create the illusion of price increases.

    • Use social media (like Twitter, Telegram) to publish false positive news or FOMO (Fear Of Missing Out) messages to attract retail investors to chase high prices.

    • Use bots or multiple accounts to create trading volume, enhancing market activity.

  • Objective: Activate the pool to make it tradable, paving the way for subsequent selling.

3. Attract retail investors to buy, gradually sell

  • When the price of $TRUMP reaches the range of 9-11 SOL, the pool begins to accept trades. Retail investors seeing the price rise may FOMO buy $TRUMP.

  • Trading process:

    • Retail investors inject SOL into DEV's pool in exchange for $TRUMP.

    • $TRUMP in the pool is 'overflowed' to retail investors, while DEV's pool receives SOL from retail investors as compensation.

    • Since the pool follows the constant product formula X * Y = K (where X is the amount of $TRUMP, Y is the amount of SOL, K is a constant), each transaction adjusts the ratio of tokens in the pool, allowing DEV to gradually offload their $TRUMP.

  • Concealment: This operation does not directly display as large-scale sell orders in the market, but is completed through the automatic mechanism of the liquidity pool, making it difficult to detect through ordinary candlestick charts or order books.

4. Stabilize the price and continue selling

  • DEV may continue to pump or maintain the price within the 9-11 SOL range to attract more retail investors to buy, ensuring the pool continues to process transactions.

  • The transaction fees generated during this period (usually 0.3%) will partly reward DEV, but most of the profits come from offloading $TRUMP at high prices to obtain SOL.

  • When DEV sells out their $TRUMP or the market begins to decline, they may quietly withdraw from the pool, leaving with SOL profits.

5. Withdrawal and market crash

  • After completion, DEV may withdraw from the liquidity pool, cease operations, or sell the remaining small amount of $TRUMP to the market.

  • Due to retail investors buying at high prices without subsequent buying support, the price of $TRUMP may fall rapidly, resulting in losses for retail investors.

3. The principles and advantages of unilateral pool selling

Principle

Unilateral pool selling relies on the liquidity pool mechanism of AMM in the Solana ecosystem. The liquidity pool automatically adjusts prices and token ratios through the constant product formula X * Y = K:

  • When someone buys $TRUMP with SOL, the SOL in the pool increases, $TRUMP decreases, and the price rises.

  • DEV ensures that the pool is activated only when the price is raised by setting the price above the market price, allowing retail investors to buy at high prices.

Advantages

  1. High concealment:

  • Traditional selling (such as directly selling in the market) will show up in the Central Limit Order Book (CLOB) or on-chain trading records, making it easy for retail investors or analytical tools (like GMGN dashboard) to detect.

  • Unilateral pool selling is accomplished through the 'overflow' mechanism of the liquidity pool, with trading records dispersed within the pool, making it hard for ordinary investors to notice.

2. Avoid market depth impact

  • Large sell orders may lead to insufficient market depth and price crashes, while unilateral pool selling gradually releases tokens, reducing direct impact on market prices.

3. Exploiting retail investor psychology

  • Whales create FOMO by pumping and hyping, attracting retail investors to buy at high prices, achieving the goal of 'harvesting retail investors'.

4. Low-cost operations:

  • The Solana network has low transaction fees, and the cost of creating pools on Raydium is low, allowing DEV to easily implement this strategy.

4. Identifying clues of unilateral pool selling

Although unilateral pool selling is covert, vigilance can be increased through the following methods:

  1. Observe on-chain data:

  • Use tools (like GMGN dashboard, Solana Explorer) to track the trading records and changes in holdings of large wallets.

  • Pay attention to whether large amounts of tokens suddenly flow into specific pools, with price ranges significantly high or low compared to the current market price.

  1. Analyze trading volume and price behavior:

  • If the price suddenly spikes but lacks real positive support and the trading volume is unusually concentrated, it may indicate whale pumping activities.

  • If the price remains in a certain range for a long time but trading volume is unusually active, it may be whales selling through the pool.

  1. Check pool data:

  • Check the pool of the target token on Raydium, focusing on whether there are unilateral pools (only depositing one type of token) with price ranges significantly high or low.

  • Check the wallet address of the pool creator to determine if it is related to DEV or large holders.

  1. Social media and community dynamics:

  • Be wary of excessive hype or 'good news' on platforms like Telegram and Twitter, which may be tactics used by whales to create FOMO.

5. Case study: Unilateral pool selling of $TRUMP

Assuming the current market price of $TRUMP is 6 SOL, DEV holds 10,000 $TRUMP and wants to sell at a high price:

  • Step 1: DEV creates a pool on Raydium, setting the price range to 9-11 SOL, depositing only 10,000 $TRUMP.

  • Step 2: DEV pumps the price of $TRUMP to 10 SOL through buy orders or hype.

  • Step 3: Retail investors see the price rise and FOMO buy $TRUMP, injecting SOL into the pool in exchange for $TRUMP, while DEV's pool receives SOL, and $TRUMP gradually overflows to retail investors.

  • Step 4: DEV keeps the price within the range of 9-11 SOL, continuously selling until clearing out 10,000 $TRUMP, earning significant SOL profits.

  • Step 5: DEV exits, and the price of $TRUMP crashes due to reduced buying pressure, leading to losses for retail investors.

6. Summary

DEV's unilateral pool selling is a covert and efficient market manipulation technique that relies on the AMM mechanism of the Solana ecosystem and retail investors' FOMO psychology. DEV creates a unilateral pool with a price range above the market price, pumps the price to activate the pool, attracts retail investors to buy at high prices, and gradually offloads tokens to realize high profits. This operation is difficult to detect through conventional candlestick charts but can be monitored through on-chain data analysis, trading behavior observation, and community dynamics monitoring, allowing investors to remain vigilant and reduce risks. Understanding the principles and preventive methods of this technique is an important step in protecting one's interests and rationally participating in the DeFi market.

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