$SIREN, the token that launched on Binance Alpha and its contracts during the "broccoli" era when people were guessing what CZ's dog's name was, has been almost forgotten.
However, when its "surge" was widely discussed online a couple of days ago, its total liquidation volume ranked fourth, only behind Bitcoin, ETH, and XAU, at approximately $23.25 million. If it weren't for Trump's renewed TACO-related actions that boosted gold's volatility, SIREN would have been third.
The price of this coin once approached $5, corresponding to a market capitalization of approximately $3.675 billion, and it once squeezed into the top 30 of the total market capitalization of cryptocurrencies, surpassing established tokens such as OKB and UNI.
This isn't the first time we've seen this phenomenon in a sluggish market. $PIPPIN, $RIVER, $BEAT, $MYX… By analyzing the related questions raised by $SIREN, what lessons can we learn from these similar situations?
Are there any clues to "leverage scams"?
As early as March 5, @c_ckoko tweeted that "$SIREN clearly has absolute control of the tokens, which is a way to harvest users across different exchanges."
His tweet perfectly explains how this "leveraged scam" works: the depth difference in spot trading on the exchange allows a small amount of capital to create large fluctuations and influence the price of Binance contracts for profit.
Furthermore, as he suggested at the end of his tweet, the $SIREN contract price index was adjusted. At the time he posted the tweet, the impact on the Binance contract price index was: Gate spot 50%, Kucoin spot 12.5%, Binance contract 12.5%, and Binance Alpha 25%. After two subsequent adjustments, the current contract price index weighting is: Gate spot 25%, Kucoin spot 12.5%, Binance contract 12.5%, and Binance Alpha 50%.
According to Arkham data, the Gate's stock of $SIREN was only 64,000 on March 22.
In this scenario, a trading volume of $100,000 can create a minute chart with a fluctuation of nearly 40%.
Looking at the open interest, $SIREN showed obvious anomalies starting from February 8th. The open interest, which had been hovering around $3-5 million for a long time, suddenly surged to $58.83 million.
Of course, unusual signs don't necessarily lead to a specific, inevitable outcome. After all, the chips are all in the hands of the controlling shareholders, and we can't be sure how they will reap the rewards.
Technique
First, they control the supply of shares, accumulating a large amount of physical shares and opening large long positions to push the price high.
On-chain analyst EmberCN (@EmberCN) compiled data on the market control of $SIREN and found that as much as 88.5% of $SIREN is controlled by a major player, based solely on on-chain data. If the portion deposited by the major player into the CEX is included, the figure would be even higher.
The tweet above also suggested that DWF Labs might be the mastermind behind the incident, but Zac, co-founder of DWF Labs, denied this claim in a group chat.
After driving up prices, the market maker induced short sellers by placing short orders, making retail investors feel that a temporary top was approaching.
As seen in the fee chart above, starting March 14th, $SIREN frequently exhibited high negative fees, with short sellers continuously feeding money to the market makers' long positions. The market makers then used this "free" funding to further push up the price. In the early morning of March 23rd, the Gate.io spot market experienced a dramatic 78% fluctuation within 10 minutes, with a corresponding trading volume of only about $450,000. The price of $SIREN rose from $2.75 to nearly $5. This means that many people were liquidated.
At this point, $SIREN might not be finished yet. Looking at it from a purely speculative perspective, the market maker could potentially close out all long positions, dump all spot goods, creating a massive bearish candlestick, and then close out the short positions at a cost far lower than the cost of opening them. Comparing the price movements of $RIVER, $POWER, and $BEAT with $SIREN on the same chart reveals that $SIREN seems to be just one final, decisive move away from its gains.
As this article was about to be published, the above predictions had come true:
Conclusion
Regardless of the current market downturn, the emergence of such profit-taking schemes is always undesirable. Admittedly, some skilled traders may be able to profit from the chaos caused by misinformation, but for the vast majority of retail investors, it is nothing more than a gamble devoid of any fairness.
When such blatant exploitation occurred among the top 30 cryptocurrencies by market capitalization, I could only sigh.
