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"Show me the incentive and I will show you the outcome," a famous quote by Charlie Munger. Incentives are equally visible in the market. Exchanges can favor specific market participants by setting particular fee models, thereby indirectly influencing spreads and liquidity. They can also provide loans of corresponding value based on the scale of liquidity to encourage market makers to offer more liquidity. The possibilities are endless, but the key is to understand which incentives are needed to attract attention and achieve goals.
After the Hiperliquid airdrop ended on a large scale, traders were reluctant to miss the opportunity, which was particularly evident in the upgrade of Binance Alpha 2.0. As the pre - listing section of the Binance exchange, this platform specializes in incubating emerging tokens that have potential but have not yet met the main site's listing standards. The launched 2.0 version innovatively introduced an auction trading model, providing early projects with an unprecedented liquidity entry point.
We are not here today to discuss the auction function of Binance Alpha or other features. What I want to talk about is a small story: how incentives, the FOMO mentality, and potential future returns have given rise to various anomalies in the market.
Binance Alpha points, 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 it seems that trading volume points play a decisive role. These points can be used to participate in Alpha series activities (such as airdrops or TGEs). Historical data shows that tokens associated with Binance Launchpad often perform well, so the project is quite attractive. Given that the scale of potential returns is not yet clear, many traders are eager to collect points in the hope of obtaining substantial returns.
Now let's get to the point. The mechanism is simple: users need to generate trading volume to obtain points. As a result, we see a surge in trading volume for most coins related to Binance Alpha. At the same time, the market also shows abnormal fluctuation patterns that are extremely rare under normal conditions.
Take Bedrock ($BR) as an example. It is currently the hottest token on PancakeSwap, with a trading volume of more than $3 billion in the past 24 hours. Its chart shows that both buyers and sellers are actively trading simultaneously, resulting in huge transactions (as shown in the 10 - minute rolling trading volume below the figure).
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
This indicates that despite the total trading volume reaching about $3 billion, the net difference in the USDT value of buying and selling transactions is close to zero. This phenomenon suggests that there are market participants executing hedging strategies, whose trading activities generate almost no net position risk.
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
When trying to interpret the truth behind the data, especially in the absence of additional background information (on - chain data usually provides more clues, while centralized exchanges only disclose information visible to all users), you must delve into every detail: transaction amounts, frequency, outliers, market impact distribution, order size, etc. When you cannot grasp the complete information held only by the exchange, you need to focus on every detail. Let's focus on order size analysis.
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
This histogram does not conform to a normal distribution. In most cases, we see an exponential distribution of trading volume, but not here. Most transactions are concentrated in the 12k - 14k range, which is considered a high level under normal standards. This concentration should raise a red flag and requires in - depth analysis. It is recommended to refer to the trading volume data of other assets on the BASE chain as a comparison benchmark.
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
Delving into on - chain data can particularly reveal where the problem lies. It is obvious that some anomalies are occurring. It is highly likely that people are trying to quickly earn points in order to participate in future Binance airdrops. Let's see if this hypothesis holds true.
How to execute this strategy? It's simple: conduct two - way trading, minimize losses as much as possible, and accumulate points as much as possible. It's actually a clever idea. If this strategy holds true, then we should be able to see that most wallets show almost the same number of tokens traded on both the buying and selling sides. Now let's take a small sample of on - chain data for analysis.
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
As we can see, the net flow of most wallets does indeed tend to be close to zero. Now let's quantify specifically how many monetary units belong to this small range close to zero.
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
To be honest, the result is more astonishing than I expected. More than 95% of the wallets participating in the trading of this token have a net position close to zero (which means that the quantities they bought and sold during this period are basically the same). It is clear that the purpose of such operation is to generate points while avoiding risk exposure.
I am also curious about how many points these wallets are aiming for. They are likely to follow a certain strategy, study the Binance Alpha documentation, and find opportunities to hit a specific points threshold. Let's analyze the data.
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
According to my dataset, except for five outliers, all wallets have generated 14 to 20 Alpha points, no more and no less. This is probably because there is no rule that "the more points, the greater the airdrop reward," and traders only need to reach a specific threshold.
I am also curious: What is the cost of generating an Alpha point? Since they often conduct two - way trading in the same transaction block or close - by blocks, there is likely to be some loss, but how much exactly?
Unveiling the Points Illusion of Binance Alpha: Behind the $3 Billion Trading Volume, 95% Wallets Have a Net Position of Zero?
The average cost of an Alpha point is about five to ten cents. This cost is not high, but we are still not sure about the final return.
What I want to point out is that people will always try to "crack" the system. They want to get the highest return with the lowest investment. Whether you are building an exchange, a DeFi protocol, or a management team, it is your responsibility to design a reasonable incentive structure. I hope this example clearly reveals this core point.
