Author | @0xBenniee
Original Title: "On-chain Alpha Game: A One-sided Game Directed by Market Makers?"
In the current market environment where liquidity is not yet sufficient during the interest rate cut cycle, the bull market of Binance Alpha continues to unfold: an obscure project can often quietly achieve several times the increase in a short period.
This article will discuss the market-making strategy of launching Alpha + Perp from the perspective of market makers, with the inner monologue of a market maker, aiming to "dance with the big players."
Binance Alpha serves as a natural liquidity pool, concentrating huge attention and retail resources on the launch day, while also attracting a group of native Alpha users to participate in trading—these users may choose to sell and take their profits or may be optimistic and choose to hold or increase their positions. Each "Alpha worker" is placing their bets from their own perspective.
However, if we switch to the perspective of the project party and market makers, the inner thoughts are actually more straightforward: I have already paid 1-2% of the chip cost to launch Alpha, and additionally spent costs to open Perp. Having paid so much "protection money," the probability of abandoning the project later is relatively low.
Thus, we see the subsequent "Alpha on-chain bull market." In fact, relying solely on the Alpha spot market makes it difficult to achieve large-scale distribution. The big players and market makers must leverage Perp to continuously increase open interest (OI) to attract more retail investors, turning this transaction into a "casino" where gamblers continuously stay at the table.
Today's project logic is different from the past "narrative-driven" approach; it has completely shifted to a capital-driven model: whoever has thicker chips can pull off a stronger market; as long as there are enough gamblers entering, market makers can continuously create volatility and extract profits from it.
Summary as follows
- Alpha provides a natural attention pool and initial user base;
- Perp is the core tool for big players/market makers to increase OI and attract traffic.
- For market makers, the key logic on the launch day is:
Alpha → Attracting chips + Building positions;
Perp → Pumping + Distributing.
Taking the launch of a new coin as an example, let's see how market makers profit through Alpha + Perp.
The Alpha launch time is 8:00 (UTC), and the Perp launch time is 10:30, leaving market makers with only two and a half hours to collect their goods. This period is essentially the stage where market makers and retail investors compete for chips; proactive market makers will grit their teeth and take the goods. If this portion of chips is snatched away by a large number of free-rider retail investors, the subsequent cost for market makers to pump the price will increase. An excellent market maker will strive to control their costs to maximize profits.
(From the market situation, the main market-making force on Alpha is primarily proactive market makers. According to industry speculation, their funding scale is usually in the millions of dollars, while the liquidity supply on the spot side is relatively sufficient.)
After Perp goes live, market makers will attract more retail investors by pushing up OI (open interest), turning this game into a "casino that gets busier as more people sit down." The core role of Perp is not just to provide hedging tools but to amplify market attention and trading participation.
At the same time, market makers/project parties often coordinate with relevant KOLs for promotions and some positive news or marketing PR to further create topics and heat, attracting more attention. Whether going long or short, they are essentially contributing liquidity to the market, which also provides big players with greater maneuvering space and more abundant profit sources.
As shown in the figure, after Perp goes live, OI is quickly pushed up and remains stable at a high level. In the early stages, big players usually do not choose to complete their distribution through significant price increases or violent sell-offs. The reason is: if they sell off too early, the chips may not be able to be bought back at the same or even lower cost, which would instead raise their overall pumping cost. The core goal of the big players is to hand over the chips to retail investors as much as possible at high prices, ensuring that the distribution is completed smoothly.
During the pumping process, funding rates often provide key references. By observing changes in funding rates, big players can gauge whether market sentiment is overheated and optimize details based on that. For example, when funding rates spike abnormally, market makers can use futures-spot hedging or short-term funding rate arbitrage to lower their holding costs, further enhancing overall returns.
With all the spot in the hands of market makers, as long as they do not sell off, through the funding rate market, during the price increase phase from 9/12 to 9/15, OI continuously increased, and funding rates spiked multiple times,
Peak: 0.3-0.4% / 4h (annualized approximately 270%-360%);
Average: 0.1-0.2% / 4h (annualized approximately 90%-180%).
This means that market makers can establish hedged short positions in the futures market while collecting goods in the spot market, continuously benefiting from funding rates, forming a stable arbitrage cash flow as an important means of cost optimization.
On 9/16, when OI remained high and long positions were heavily accumulated, big players chose to sell off significantly, profiting from short positions while distributing in the spot market:
Price dropped from 0.058 to 0.035, a decline of about 40%;
Big players' cost range: 0.015-0.02, average selling price: about 0.045-0.05;
Single profit margin: approximately +150%-200%.
(In an ideal situation, the income from the on-chain liquidity pool has not been included in the overall calculation. Different market makers have slightly different specific strategies.)
Key Points for Dancing with the Big Players
If a project is highly controlled in the early stages or there is a lot of community FUD, it is often worth paying more attention; while grand slam projects are more complex due to their chip structure, users should participate cautiously.
If Alpha + Perp can be launched simultaneously on the first day, it usually indicates sufficient liquidity, and price volatility will be more intense.
Users attempting to estimate the profitability of big players during each wave of price increases and corrections can help understand their trading logic.
When Alpha opens, pay attention to the pricing of Pancake V3; if the opening price is too high, waiting for a more suitable price and rhythm may be more prudent.
Conclusion
The launch model of Binance Alpha + Perp is reshaping the current new coin market landscape. On the surface, this is a narrative-driven new coin bull market, but in reality, it resembles a structured game directed by market makers. Alpha provides chip accumulation and initial flow, Perp amplifies liquidity and volatility, while OI and funding rates become key tools for big players' operations. As retail investors, we may capture short-term opportunities from this, but more importantly, we need to understand the logic behind it: how far the market can go does not depend on how compelling the narrative is, but on how strong the capital is and how precise the timing is.
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