Binance Alpha Star Coin BR instantly experiences a 50% Slump, replaying the ZKJ trend, and the Alpha mechanism is once again questioned.

Original author: ChandlerZ, Foresight News

On July 9, Binance's Alpha project witnessed another familiar flash crash. In less than 10 minutes, the star token BR from the recent Binance Alpha project plummeted from a high of 0.129 USDT to 0.053 USDT, instantly halving its price.

The process of the plunge can be described as "clean and neat." According to @ai_ 9684 xtpa monitoring, the OKX liquidity sector shows that before the flash crash occurred, the liquidity in the BR trading pool remained stable at a high level, exceeding 60 million dollars at one point. However, the explosion of the event concentrated within just 100 seconds, during which 26 addresses almost simultaneously withdrew 47.59 million dollars in liquidity. Following this, 16 addresses initiated high-value token sell-offs, including 3 addresses at the million-dollar level and 13 addresses at the 500,000-dollar level. The centralized selling pressure instantly broke through the liquidity, causing a waterfall decline in coin prices, and the BR liquidity currently remains at only 14.56 million dollars.

The following are the TOP 5 main dumping addresses

• 0x00E0E2225E48e40ac7A1C5C48C3359325C7F41c3
• 0x20c375580C4BD0DA36aec0c55406fa645F964FBd
• 0x63293340bb17D9bc0f66f1956a810f7BFC7c857B
• 0x58e837F8F9C1aCfE618AdbBa95314BE2ab55d19F
• 0x31A256E01900f93831361dF928EB32F83A6Af40E

Who is dumping the market?

Analysis suggests that this crash does not seem to be the actions of the project team. Firstly, regarding motivation, using the previous collapse of ZKJ as a reference, this approach is too "blatant". This large-scale volume manipulation appears to be aimed at getting into a contract/spot. Secondly, regarding the data, the main liquidity address of the project team, 0x5f6f70821362376928a67b91fa2179683fe48de7, still holds $4.685 million in liquidity, and the last operation was on July 7th; there have indeed been no operations during the period of the sharp decline.

The three main addresses with a level of one million dollars are all newly created addresses from two weeks ago. They started accumulating large positions in BR directly after withdrawing funds from the exchange between June 24 and June 28, indicating a clear intention and a single source of funds.

The information about the top 4 dumping address 0x58e837F8F9C1aCfE618AdbBa95314BE2ab55d19F is relatively abundant. The source of funds can be traced back to 2017, and it has interacted with old exchanges such as Yunbi / ZB / Liqui / YoBit, making it a definite OG.

The methods are no different from the last ZKJ crash, which involved "instant withdrawal of liquidity + large sell-off + multi-address cooperation". The main issue is that it is quite difficult to investigate, as the funding sources of the main addresses are very singular.

Lessons from the Flash Crash of ZKJ

In fact, such operations have long been traceable. The flash crash event of ZKJ can be seen as a cautionary tale for BR in this round of decline. Less than a month ago, on June 15, the ZKJ token also experienced a drop of over 80% in a short period. According to the preliminary investigation report released by Polyhedra afterwards, the ZKJ flash crash was triggered by multiple addresses collaboratively withdrawing large amounts of liquidity from PancakeSwap V3, and then quickly dumping it. This on-chain selling pressure directly triggered the liquidation mechanism on centralized exchanges, coupled with Wintermute transferring 3.39 million ZKJ to CEX in a very short time, further exacerbating market panic, ultimately resulting in nearly $94 million in forced liquidations. More importantly, the ZKJ flash crash also occurred under the Binance Alpha incentive mechanism, leading to a market structure with highly concentrated liquidity that was not locked. These highly similar characteristics almost overlap with the entire chain of the BR flash crash.

Currently, the BR project team states that they have not withdrawn liquidity and have publicly disclosed the liquidity address. They also will not withdraw liquidity in the future and hope users remain rational. At the same time, they pointed out that to further support users trading in the PancakeSwap BR/USDT trading pool, they will provide a special airdrop plan for PancakeSwap BR/USDT trading users. During periods of significant price fluctuations, if users experience a noticeable price difference due to market volatility or slippage, they will be eligible for airdrop compensation. The specific rules and distribution plan for the airdrop will be announced and completed within the next few days.

Although the project team might not have "personally participated", the issues inherent in the mechanism are difficult to avoid. BR is one of the "score-boosting" tokens in the Binance Alpha project, where the project team attracts retail investors to provide liquidity and participate in the Alpha activity points competition by inflating the volume.

On June 25, on-chain data shows that BR has become the token with the highest trading volume on Binance Alpha, with a 24-hour trading volume of 238 million USD. One of the suspected major addresses of Bedrock's official LP, starting with 0x9bd, has net invested 50 million BR (approximately 4 million USD) since June 19 for liquidity provision, including selling 41.436 million tokens on-chain at an average price of 0.07959 USD 5 hours ago, worth 3.298 million USD. Subsequently, this address added 9.27 million BR and 3.427 million USDT as bilateral liquidity to Pancake, generating 5,412 USD in fees within five hours.

Binance Alpha Liquidity Mechanism Faces Further Scrutiny

The community's reaction to such events is becoming increasingly intense. Crypto OG @BroLeonAus quickly pointed out after the sharp decline in BR that the risks associated with this "wash trading + pool sucking" model have long been traceable. As early as the initial launch period of BR and projects like AB, behaviors were observed that featured linear candlesticks, low trading fees, and continuous guidance for liquidity to join, demonstrating typical tendencies of "wash trading and pool sucking." Now, both have shown signs of a flash crash almost simultaneously, proving the prediction to be true.

In his view, the current point calculation rules of the Binance Alpha mechanism have obvious flaws, indirectly encouraging project parties to create superficial activity to gain platform exposure and rewards. Under this design, it is enough to create an illusion of "deep liquidity, stable trends, and low fees" on-chain to attract a large number of retail investors as LPs, forming a liquidity accumulation. The project parties only need to "bait the trap" and wait; once the conditions are ripe, they can quickly withdraw liquidity and realize their profits, while ordinary users become the last ones to pick up the pieces.

BroLeon revealed that the Bedrock team communicated with him last week regarding promotional collaboration. He clearly proposed risk control suggestions, requesting a third-party lock on the project's liquidity to ensure user safety. However, the other party did not provide a clear response, and the collaboration could not proceed. He emphasized that although there is currently no solid evidence indicating that the BR project team directly participated in this dump, the greater responsibility lies with the Binance wallet team, who ignored the significant risks and loopholes evident in this rule.

The platform was originally intended to benefit retail investors, but the actual situation has turned into project parties exploiting loopholes to harvest retail investors, which in turn has led to negative sentiments towards the platform. This outcome clearly contradicts the original intention. In the current DeFi market, any incentive mechanism that cannot constrain its boundaries from being abused can potentially become a "cash machine" for speculators. Alpha was once seen as Binance's positive exploration of the on-chain liquidity ecosystem, aimed at encouraging more users to participate in on-chain trading through platform incentives, thereby increasing the activity and decentralization of tokens.

However, it seems that the original intention of this model in its design has gradually become distorted. The incentive mechanism is not linked to lock-ups or real liquidity, leading to rampant wash trading; project parties or short-term arbitrageurs can induce the market to create a superficial prosperity without bearing much cost, ultimately completing a net collection in a state lacking review and constraints. If no reforms are made, relying solely on post-compensation or explanations is unlikely to prevent the occurrence of the next "flash crash."

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