According to my research, here is a brief summary of the roles in on-chain liquidity games.
Developers and Insiders:
– False utility pumpers or “exploiters” were very popular during the early AI hype, as nobody really understood AI at the time, but everyone wanted to get in early.
– They never completed more than 1% of their roadmap and usually relied on influencer hype.
– Teams often allocated a large supply to themselves during contract launch and then distributed before others. These tokens were then hidden in multiple wallets and sold off.
– Slow pumps after the initial hype or encountering vulnerabilities after weeks of pumping, followed by a quick exit after accumulating a large market cap (20-100 million).
– Involved in syndicates that repeatedly release false projects following the current hot narrative. These projects are often spin-offs of successful venture-backed projects.
Programmatic Snipers:
– Customized bots that systematically sniper multiple ETH projects.
– Bots follow specific parameters based on smart contracts and trading volume.
– The goal is to achieve 10-100x returns on a few projects from many failed or exit scams, almost like a form of profit.
Manual Snipers (ETH):
– One of the most profitable on-chain traders.
– Searches for new contract addresses through research or internal messages.
– Simulates contracts to check security and determine potential or team background.
– Outbids other snipers during promising contract launches.
– Buys a large supply when there is a prospective on-chain or stealth project launch without anti-sniper defenses or the use of platforms like Fjord.
– Snipes with multiple wallets to hold a significant supply, exceeding 1%.
– In many cases, projects are at the mercy of snipers, who can crash the project to zero in the early stages.
– Many snipers compete against each other once they enter a project, hoping for “dumb money” to enter and sell off when the market cap reaches 500k-1 million, causing the project to die. This happens daily on the ETH mainnet.
– Snipers who have performed significantly better than others in the past year are identified using basic analysis and machine learning to determine which contracts may bring profits exceeding 5 million or more in market cap.
– Most snipers hold tokens for less than a few hours.
On-Chain Data Traders:
– Track the actions of snipers and insiders.
– Track profit (highest PNL) wallets.
– Track trading volume and holder alerts.
– Often buy strong projects after snipers sell off, or even knowing snipers hold a large supply if the launch is very promising.
– Often perform some basic or narrative analysis on new launch projects.
Long-Term Holders:
– As on-chain trading becomes an increasingly popular field and more on-chain services are available for retail use, their popularity has diluted and increased.
– They are the liquidity exit for the above participants.
– These traders often play against each other on new launch projects that eventually go to zero. It’s just a matter of who gets in earlier.
– They rely on “dumb crypto Twitter” (CT), Key Opinion Leaders (KOLs), or other subsequent on-chain traders as their liquidity exit.
Other Traders:
– Haven’t learned to use Etherscan or check basic data metrics for tokens.
– Get information from call groups, KOLs, and crypto Twitter (CT).
– Slower traders who tend to buy hype.
– Believe in the utility of cryptocurrencies beyond speculation.
– Lagging behind in narratives.
– Likely been in the field for less than a year.
– These traders have likely given up on buying new utility projects or meme coins. Or they are slowly starting to learn on-chain trading and gradually upgrading to the categories mentioned above.
Summary:
On-chain trading is a liquidity game involving developers, snipers, on-chain data traders, and others. As liquidity decreases in the on-chain space, competition among participants becomes more intense, resulting in the top of the pyramid reaping most of the rewards.