Author: danny; Source: X, @agintender
In 2025, the global cryptocurrency market entered an unprecedented battle of liquidity harvesting. With market liquidity drying up, the profit-making model shifted from the early post-listing distribution model to a pre-listing harvesting model. Against this backdrop, Token Generation Events (TGEs) are no longer merely milestones for project launches, but have evolved into a meticulously designed "liquidity capture" game.
This article exclusively showcases the "Nine Slashes of Dugu"—the ruthless tactics employed by project teams before and after TGEs in 2025—how they utilized contract tools, point mechanisms, pre-market markets, prediction markets, and the concentrated liquidity characteristics of DEXs to comprehensively harvest liquidity from retail investors, market makers, and even exchanges.
See how many of these slashes you've fallen for?
Background: The Fertile Ground for Structural Valuation Defects: Low Float, High FDV In the market logic of 2025, the token distribution model of "low circulating supply and high fully diluted valuation" is the root of all tactics. Why is this? Because the valuation before TGE is too high. Assuming the initial release is not compressed, it simply cannot support this valuation. Therefore, the only option is to create artificial scarcity by limiting the initial supply, thereby pushing up the token price in the early stages of TGE so that VCs can maintain a respectable paper wealth. Furthermore, the market in 2025 also treats tokens as the only product, forcing all parties to go to great lengths to expand sales channels. This shift in model has also changed the mindset of project teams and operators. The initial 20% circulation is now considered 100% of the total supply; they don't treat the remaining 80% as equity and are truly focused on "seizing the moment," selling and exiting as quickly as possible. In this context, exchanges, to maintain appearances, community opinion, protect their own interests, and prevent project teams from unfairly distributing tokens to their friends, are forced to simultaneously demand that project teams airdrop their tokens to exchange users while maintaining prices. Therefore, they further require project teams to reduce the initial circulating supply and increase margin and liquidity funds. They want the horse to run fast with little feed, but also want it to pull a lot. The pressure on project teams with low fundraising amounts is imaginable. Project teams are also helpless; after all, they also have costs to bear and need to account to investors. Moreover, the initial circulating supply is reduced due to exchange involvement, resulting in insufficient profits. To recoup costs or meet exchange requirements for listing contracts and spot trading, companies had no choice but to seek assistance from external market makers. These market makers (aka "wild manipulators") were notorious for their ruthless exploitation. The market liquidity crunch in 2025 led to the emergence of many "creative" exploitative tactics, with everyone only able to scrape together scraps from the cracks. They didn't intend to do anything malicious; they simply had no other option. The first tactic: Contract and Spot Linkage: Liquidity Squeeze + OTC. In 2025, perpetual contracts became the core of the crypto market. Q2 2025 data showed that contract trading volume accounted for 59% of total derivatives activity, approximately $12 trillion. Project teams can only utilize this slightly liquid tool to generate profits and recover costs (by manipulating the liquidity of the contract market by controlling spot prices). 1.1 Funding Rate Harvesting Tactics Manipulators typically control most of the spot supply, driving up or down spot prices at crucial moments. When spot prices are driven up, contract market prices often fluctuate accordingly, and highly leveraged positions face liquidation risk. At this point, the contract price is higher than the spot price, causing funding rates to become positive, and long positions must pay fees to short positions. Project teams or their affiliated entities often play the role of "short sellers." By maintaining spot prices at an artificially high level, they not only obtain high funding rates from long positions (usually settled every 8 hours), but also attract more retail investors during the price surge, executing reverse operations when liquidity is sufficient. 1.2 Leveraged Liquidation Scheme In a illiquid market, large orders generate significant slippage. Project teams exploit this characteristic by suddenly dumping large amounts of stock in the spot market when contract positions accumulate to a critical point. This sudden sell-off triggers forced liquidation of long positions, leading to further selling and a domino effect. The manipulators then buy back their holdings at the bottom, completing a "double kill" on both long and short positions. 1.3 Harvesting OTC Buyers By controlling low-circulation spot supply and manipulating contracts, the price is stabilized within a certain range over a period. This "market consensus" data is then presented to potential OTC buyers to justify the OTC price, allowing them to dump tokens at a price higher than their cost to unsuspecting buyers.
Second Strategy: Pre-Market Liquidation: Unlisted Harvesting Tactics
In 2025, harvesting activities even began before tokens were officially listed on exchanges. Utilizing open pre-market trading platforms like Aevo, Hyperliquid, and Whales Market, as well as Perp DEX, a customized harvesting tactic targeting advanced players was developed.
2.1 Pre-Market Contract "Pin-Hit" Hunting
Many sophisticated traders and airdrop hunters use pre-market contracts for hedging: if they expect to receive an airdrop of 10,000 tokens, they will short an equivalent amount of pre-market contracts to lock in dollar value. Project teams astutely seized this demand and turned it into a harvesting opportunity.
Liquidity Trap: The depth of the pre-market trading market is usually far lower than that of the official market.
Order books on platforms like Hyperliquid are extremely thin at certain times. Harvesting Process: Position Monitoring: Market makers or project teams monitor the concentration of short positions in pre-market contracts using on-chain data and exchange APIs. Targeted Liquidation: At the moment when TGE is approaching and airdrop expectations are strongest (when short hedging demand is greatest), traders use relatively small amounts of capital to buy in the pre-market, instantly driving up the price by 50% or even 100%. Forced Liquidation: Since pre-market prices are usually used as mark prices, this sudden surge (flash crash) triggers the forced liquidation mechanism for short positions. Even worse, margin calls can cause losses to the exchange's insurance fund.
Price Reversion: After a margin call, the price quickly falls back to normal levels. Through this operation, the manipulator not only harms users attempting to hedge (forcing them to hold spot positions), but also directly profits through the counterparty's positions.
2.2 Spot Price Manipulation to Harvest Perpetual Contracts
In a low-liquidity environment, spot prices are easily manipulated, and spot prices are often the source of the index price for perpetual contracts.
Market manipulators only need to use a small amount of capital in the spot market to dump or pump prices to trigger a chain reaction of margin calls in the much larger contract market. For example, creating a 10% instantaneous drop in the spot market can trigger the liquidation of highly leveraged long positions in the contract market. During the multiple market crashes of 2025, platforms like Hyperliquid experienced targeted liquidations that were inconsistent with the macro market, raising suspicions that specific market makers were engaging in "peer-to-peer" exploitation of their own platform users' positions. The third tactic is the IOU delivery trap. On IOU platforms like Whales Market, both buyers and sellers must pledge margin to ensure token delivery. However, this involves a fatal trap based on "information asymmetry." Sellers typically sell tokens based on the project's publicly announced TGE schedule and unlocking rules. However, the project may suddenly change the rules 24 hours before the TGE, such as introducing Sybil screening, mandatory lock-up periods, or phased withdrawal mechanisms. This sudden rule change prevented sellers from withdrawing their tokens and completing delivery on the platform on time. According to Whales Market's smart contract rules, sellers automatically default, and their entire staked margin is forfeited and compensated to the buyers. Related parties with inside information can act as buyers in the OTC market before the rule change is announced. When the rule change leads to widespread defaults, these "buyers" profit risk-free from the forfeited margins of the sellers. Alternatively, project teams may act as sellers of "points" to increase their value and opening market capitalization. If, after the opening, they find that their tokens are performing significantly better in the secondary market than their pre-market IOU price, they may choose to strategically default.
Fourth Technique: Node Space Financing
In 2024-2025, node sales have replaced ICOs as the mainstream. Project teams sell so-called Actively Validated Service (AVS) nodes or light nodes through a distribution model, promising to earn token rewards by running these nodes in the future.
4.1 High Premium for Software Licenses
Essentially, retail investors often only purchase a software license without actual hardware support. Project teams have raised hundreds of millions of dollars in early stages through this method (e.g., BlockDAG raised $198 million, and Aethir raised over $146 million through node sales) without incurring any legal liability for interest or equity dilution.
4.2 Tiered Pricing and ROI Decay Node sales commonly employ a tiered pricing mechanism. Prices rise exponentially with sales volume (e.g., Tier 1 sells for $300, Tier 50 for $5000). This design creates extreme panic buying, inducing users to buy at irrationally high prices. All tiers of nodes typically share the same token allocation pool. This means that users who buy at higher prices later will have a payback period several times, or even dozens of times, longer than early users. As the number of nodes increases, the returns per node are diluted, and coupled with the inevitable decline in token prices due to high FDV, latecomers are almost destined to fail to recoup their investment, becoming the "bagholders" for early participants and the project team. 4.3 Dynamic Adjustment of Reward Rights Once funds are raised, the project team has absolute right to interpret the node reward rules. They can reduce node token output at any time under the pretext of "system upgrades," "cybersecurity," or "inflation control," or dilute retail investors' expected returns by increasing the total number of nodes. 4.4 The Derivatives Trap of Liquid Node Tokens (LNT) To address the issue of poor liquidity in node NFTs, the market has thoughtfully introduced Liquid Node Tokens (such as vATH). LNT allows users to cash out future unlocked tokens in advance, but this introduces leverage risk. The price of LNT is usually significantly discounted relative to the original token. When the price of the base token falls, LNT often falls even more due to insufficient liquidity pool depth (and has extremely high Impermanent Loss). This derivative essentially allows users to engage in leveraged speculation on an already highly inflated asset without any guarantees. The Fifth Technique: Market Manipulation Prediction markets like Polymarket have transcended their function as prediction markets by 2025, becoming key tools for project teams to manipulate market expectations and OTC pricing. Before tokens officially trade, the OTC market lacks a fair price. Institutional investors and OTC desks use Polymarket odds to price illiquid assets. Suppose a VC wants to sell its locked tokens at a valuation of $2 billion. They can open or participate in a bet on Polymarket through an agent: "Will Token X's opening FDV be higher than $2 billion?" Because Polymarket has extremely low liquidity compared to the spot market, a VC only needs to spend hundreds of thousands of dollars to buy the "Yes" option to push the implied probability to 80% or even 90%. Subsequently, VCs presented this "market consensus" data to OTC buyers, justifying the $2 billion valuation, thereby dumping tokens at a high premium on unsuspecting buyers. Alternatively, they could make reverse bets based on predicting popular market options, achieving a last-minute "comeback." In any case, as long as the bet amount is large enough and the returns are substantial enough, there will always be an opportunity to turn the tables. The sixth technique: DEX one-sided liquidity "limit order" style sell-off. Uniswap V3's centralized liquidity, originally intended to improve efficiency, has become a covert means of withdrawing liquidity. Classic examples include $trump, $yezzy, and various pump-related memes. The project team created a structure resembling a limit sell order by adding one-sided token liquidity within a specific price range (e.g., 10% above the current price). As retail investors bought in, pushing the price into that range, the contract automatically converted the project team's tokens into USDC. Once the conversion was complete, the project team immediately withdrew the liquidity, successfully cashing out at a high price without leaving any obvious sell order traces in the transaction log. Unlike traditional direct liquidity withdrawals, this method, through the logic of an AMM (Agent Market Maker), allows retail investors to actively exchange their worthless tokens for more liquid assets. Because this process is not directly reflected in the sell order, it is considered a "normal liquidity provision behavior," making it highly deceptive. Seventh Tactic: The Points System Trap and Airdrop Counter-Exploitation Techniques
The "points system" was the most common user acquisition method in Pre-TGE in 2025. Its essence is to transform users' on-chain interactions (providing liquidity, trading volume, generating gas fees) into "points" (options without tangible rights) that have no legal binding force, thereby achieving the unpaid exploitation of labor.
7.1 Ambiguity as a Harvesting Tool
Unlike smart contracts where "code is law," points systems typically run on centralized databases, with opaque and easily changeable rules.
Project teams usually refuse to announce clear point exchange rates at the start of the event. This gives them the power to adjust them afterward.
If too many people participate, the project team can unilaterally raise the redemption threshold or dilute the value of the points. Before TGE, project teams often launch "acceleration weeks" or "deposit bonuses" to attract a large influx of mercenary funds. These late-stage funds acquire massive amounts of points in a short period, greatly diluting the share of early long-term supporters. Early users find their months of hard work instantly devalued in the last few days. Or, just before the season ends, the token distribution rules are suddenly changed, leaving those already invested feeling helpless. 7.2 "Points Selling" and False Valuation Some project teams internally use linked accounts to generate massive amounts of points, creating the illusion of extremely high participation, thereby obtaining a higher valuation in the next round of financing. Simultaneously, project teams sometimes sell "points" to specific institutional investors or on third-party platforms through clandestine channels, prematurely monetizing tokens that haven't yet been generated. (See Chapter 4 for methods)
Eighth Technique: Sybil Detection and Confiscation
Combating Sybil attacks should be a means of maintaining fairness, but in 2025, it has been distorted into a tool for project teams to maximize their own interests.
What's particularly interesting here is LayerZero's "self-surrender" rule. The project team allows users who "surrender" and are identified as Sybils to retain 15% of the airdrop share, provided they give up the remaining 85%. The brilliance of this mechanism lies in the fact that the 85% of tokens given up are not redistributed to compliant users, but often flow back into the "community treasury" or "future incentive pool," effectively regaining control by the team. This is equivalent to levying a huge tax of 85% on the most active user group.
Another tactic is encouraging users to report each other for witchcraft, which not only creates community panic but also provides project teams with a large amount of free censorship labor. More importantly, by broadening the scope of the crackdown (e.g., considering linked withdrawal addresses on the same exchange as witchcraft), project teams can "legally" evade a large amount of airdrop rewards they are obligated to pay. The Ninth Tactic: ICO Initial Public Offering (IPO) Fundraising Tactics. Using anticipated activity (especially pre-market trading across the entire universe) as bait is the most direct harvesting method in 2025. Project teams often launch their final ICO, or "fundraising (or egg-filling) IPO" activity, when market enthusiasm is at its peak and major exchanges are hinting at upcoming listings. The project team first announces a very "affordable" market capitalization and fundraising amount with great fanfare. The participation conditions are usually quite stringent, such as community promotion, completing KYC, completing tasks, and publishing promotional articles. The first round of fundraising is typically completed within 5 minutes. Then, amidst market complaints, a second round is launched—this round is the true community round. Subsequently, when releasing tokens, "technical glitches" occur, such as withdrawal network delays, front-end page inaccessibility, and developers sleeping on the job. By the time the network is restored and deposits are credited, the liquidity has vanished.
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