One, essence analysis: A negative expectation game locked by algorithms
The core design of Binance's event contracts follows asymmetric odds rules, where players can only gain 80% of their principal when winning (invest 10U to get 8U), while losing results in the total loss of their principal. Probability theory clearly calculates its mathematical inevitability of loss:
Expected return formula:
E = (0.5 \times 8) + (0.5 \times -10) = -1U
That is, on average, users lose 1U every time they play. This mechanism is essentially a probability trap realized by the odds difference imposed by market makers, ensuring losses in the long run.
The deeper manipulation logic lies in:
Time window manipulation: High-frequency settlement cycles (10-60 minutes) combined with the law of large numbers accelerate user capital consumption;
Liquidity siphon: Small token contracts (like ACT) have weak depth, with market makers creating price fluctuations through order spoofing and ignition strategies to harvest retail investors;
Psychological trap: The illusion of short-term profits lures users to increase their stakes, ultimately falling into a 'boiling frog' style of loss.
Two, in-depth investigation of market manipulation and risk control loopholes
The April 2025 ACT flash crash event exposed the systemic risks of event contracts:
Market manipulation chain:
Abnormal users sold about 1.05 million USDT worth of ACT spot across platforms, triggering a chain liquidation in futures contracts;
Programmatic arbitrage robots accelerate price death spiral, with a drop of over 40% within 15 minutes;
Market maker liquidity vacuum (±50% depth only 1M USDT) exacerbates volatility.
Binance risk control failure:
Within 3 days, the ACT contract leverage multiplier (25x→10x) and position limit (9M→3.5M) were consecutively reduced three times, exposing the randomness of rule-making;
Insurance fund independent management failure, leading to expanded user losses due to liquidation;
API latency exceeds 500ms, unable to cope with high-frequency price spikes.
Three, the disguise of 'benefits': An illusion of a zero-sum game
High yield temptation:
Short-term volatility may bring a one-time 80% return, but a win rate above 55.56% is needed to be profitable;
Some users reduce risks through cross-contract hedging (e.g., event long + perpetual short), but the cost erosion effect still results in negative annualized returns.
Strategy inefficacy verification:
LSTM/DeepSeek model prediction accuracy is only 63-68%, unable to break through systemic negative expectations;
Cross-cycle arbitrage profits are devoured by transaction fees (annualized 105%) and slippage (daily average 1.2%).
Four, five major risks that cannot be ignored
Mathematical inevitability of loss: Users have an annualized loss rate exceeding 60% with a 50% win rate;
Liquidity black hole: Small token contracts have weak depth, making prices easy to manipulate by large whales;
Technical defects: Frequent issues like historical candlestick data tampering (e.g., modifying data after the 2019 BTC contract spike), API latency, and frequent downtime;
Rule mutation risk: Exchanges can adjust leverage, position limits, or even force liquidation at any time (like the ACT event);
Psychological addiction: High-frequency trading accelerated by dopamine stimulation drives capital to zero.
Five, alternative solutions and rational choices
Perpetual contract arbitrage: Utilizing the funding rate cycles of mainstream currencies such as BTC/ETH, with annualized returns of up to 15-25%;
Options combination strategy: Hedging volatility risk through straddles and strangles;
Spot + DeFi mining: Obtaining stable returns through staking in low-volatility markets.
Conclusion: A doomed financial experiment
The nature of Binance's event contracts is a mathematical gamble cloaked in financial innovation, whose design logic, technical architecture, and risk control system cannot support long-term stable profits. For ordinary investors, the only rational choice is to avoid such products and turn to the more transparent and fair traditional derivatives market. As the Wall Street saying goes: 'If you don’t know who the fool at the table is, then you are the fool.'