Unveiling the Points Illusion of Binance Alpha: Is 95% of the Net Wallet Position Zero Behind a Trading Volume of 3 Billion?

Author: Ltrd

Compiled by: Tim, PANews

"Show me the incentive and I will show you the result" is a famous quote by Charlie Munger. Incentive measures are equally visible in the market, as exchanges can favor certain market participants by establishing specific fee structures, thereby indirectly influencing spreads and liquidity. They can also provide corresponding value loans based on the scale of liquidity to incentivize market makers to provide more liquidity. The possibilities are endless, but the key is to understand what incentive mechanisms are needed to attract attention and achieve goals.

After the large-scale airdrop of Hiperliquid ended, traders were eager not to miss the opportunity, which was particularly evident in the upgrade of Binance Alpha 2.0. This platform serves as a pre-listing segment of Binance Exchange, specifically incubating emerging tokens with potential that have not yet met the main site listing standards. The newly launched version 2.0 groundbreakingly introduces an auction trading model, providing an unprecedented liquidity entry for early-stage projects.

We are not here today to discuss the auction features or other characteristics of Binance Alpha. I want to tell a little story: about incentive mechanisms, the psychology of FOMO, and how potential future gains can give rise to various anomalies in the market.

Binance Alpha points, which are the core element of this article, can be obtained by users through trading activities on the Binance Alpha platform. Users can earn points by creating trading volume or holding tokens, but trading volume points seem to play a decisive role. These points can be used to participate in Alpha series activities (such as airdrops or TGE). Historical data shows that tokens associated with Binance Launchpad often perform excellently, making the projects quite attractive. Given that the potential scale of returns is still unclear, many traders are rushing to collect points in anticipation of substantial rewards.

Now let's get to the point. The mechanism is simple: users need to generate trading volume to earn points. As a result, we see that most cryptocurrencies related to Binance Alpha have experienced a surge in trading volume. At the same time, the market has also shown an exceptionally rare volatility pattern under normal conditions.

Taking Bedrock ($BR) as an example, it is currently the most popular token on PancakeSwap, with a trading volume exceeding $3 billion in the past 24 hours. Its chart shows that both buyers and sellers are actively trading, resulting in a huge transaction volume (as shown in the 10-minute rolling trading volume below).

This indicates that although the total trading volume reached approximately $3 billion, the net difference in the value of buy and sell transactions of USDT is close to zero. This phenomenon suggests the presence of market participants executing hedging strategies, whose trading activities generate almost no net position risk.

When trying to interpret the truth behind the data, especially in the absence of additional context (on-chain data often provides more clues, while centralized exchanges only disclose information visible to all users), you must delve into every detail: transaction amounts, transaction frequency, outliers, market impact distribution, order sizes, and so on. When you cannot grasp the complete information held solely by the exchange, it is essential to focus on every detail. Let’s focus on order size analysis.

The histogram does not conform to a normal distribution at all. In most cases, we see that trading volume follows an exponential distribution, but this is not the case here. Most trades are concentrated in the 12k-14k range, which is considered a high volume according to conventional standards. Such concentration should raise alarms and requires in-depth analysis. It is recommended to refer to trading volume data of other assets on the BASE chain as a comparison benchmark.

In-depth exploration of on-chain data can particularly reveal the underlying issues. It is evident that some unusual situations are occurring. It is highly likely that people are trying to quickly earn points in order to participate in future Binance airdrop events. Let's see if this hypothesis holds true.

How to implement this strategy? It's simple, conduct bidirectional trading, minimize losses as much as possible, and accumulate points as much as possible. This is actually a smart idea. If this strategy holds, we should be able to see: the number of trading tokens displayed on both the buy and sell sides in most wallets is almost the same. Now let's take a small sample of on-chain data for analysis.

As we can see, the net circulation of most wallets is indeed approaching zero. Now let's quantify specifically how many currency units fall into this small amount range close to zero.

To be honest, this result is even more astonishing than I expected. Over 95% of the wallets participating in the token trading have net positions close to zero (which means the amount they bought and sold during this period is basically balanced). It is clear that the purpose of such operations is to generate points while avoiding risk exposure.

I also want to know what the target points are for these wallets. They are likely following some strategy, studying the documentation materials of Binance Alpha, and finding opportunities to hit specific point thresholds. Let's analyze the data.

According to my dataset, all wallets generated between 14 to 20 Alpha points, no more, no less, except for five outliers. This may be because there is no rule stating "the more points, the bigger the airdrop reward"; traders only need to meet a specific threshold.

I am also curious: what is the cost of generating an Alpha point? Since they often conduct two-way transactions within the same transaction block or adjacent blocks, it is likely to incur some losses, but how much exactly?

The average cost of Alpha tokens is around 5 to 10 cents, which is not high, but we are still uncertain about the final returns.

What I want to clarify is that people will always try to "crack" the system; they want to exchange the lowest investment for the highest return. Whether you are building an exchange, a DeFi protocol, or managing a team, it is your responsibility to design a reasonable incentive structure. I hope this example can clearly reveal this core idea.