Limitless Labs (LMTS) is a decentralized prediction market platform built on the Base chain. The project garnered significant early attention, securing a $10 million seed round led by 1confirmation and supported by prominent investors such as DCG, Coinbase Ventures, and F-Prime. However, the LMTS token launch (TGE) on October 22, 2025, was marked by large on-chain transactions, significant market volatility, and ambiguous explanations from the team, making the TGE a hot topic in the crypto community.

Event Review

On October 22, 2025, Limitless completed a Time General Equity (TGE) on the Base chain, officially launching the LMTS token. However, the TGE was followed by a surge in token transfers and sell-offs. A KOL noted that the Limitless team transferred 5 million LMTS tokens to a single wallet and quickly sold them, generating a profit of approximately $2.3 million. Subsequently, another 10 million tokens were transferred and immediately sold, triggering significant price fluctuations and community panic.

In response to the criticism, founder CJ explained that these addresses were used to prevent sniping bots, a "Banana Gun" mechanism designed to prevent automated front-running and protect ordinary investors. However, since the team did not disclose the relevant operation strategy in advance or explain the fund management methods, this statement did not allay doubts. Even if the operation was not malicious, in a market lacking transparency and trust, the vague explanation itself is enough to cause a collapse of trust.

Mechanism and Operation Analysis: What is the "Banana Gun Address"?

In the decentralized world, TGEs often become a bonanza for sniping bots. These bots automatically snap up tokens the moment they're launched, leveraging their exceptionally fast block monitoring and script execution speed to profit before regular users even click through. This automated sniping often causes sudden price spikes and volatile fluctuations, making it nearly impossible for retail investors to participate.

To this end, some projects have begun implementing "anti-sniping mechanisms," including delaying transaction initiation, staggered token releases, establishing whitelists, or using specific "guard addresses" to execute strategies. The "Banana Gun address" mentioned by Limitless is a prime example of this type of mechanism. Banana Gun was originally an automated trading tool widely used within the Ethereum and related blockchain ecosystems for quickly buying, selling, or snapping up newly launched tokens. Some projects leverage its automated functionality to set up a "sniper address" specifically to control initial liquidity or prevent excessive market intervention by external bots. In theory, this approach aims to allow officials to "guard" token prices through automated scripts, ensuring initial market stability.

However, the problem with Limitless is that this "Banana Gun Address" was controlled by the team, and its purpose was not disclosed to the community in advance. When tens of millions of LTMS tokens were transferred in and out of this address and then sold shortly after the TGE, the market naturally interpreted this as an official dump. Although founder CJ clarified on X that the address was used to prevent sniping, not to sell, the lack of prior explanation and third-party audit made this explanation seem weak.

Market Reactions: Price Fluctuations and Community Sentiment

According to CoinMarketCap data, LMTS saw a surge in value after its initial launch, but subsequently plummeted by over 60%, with liquidity plummeting. Community confidence quickly collapsed, sparking heated debates between influencers (KOLs) and users on social media platforms. Some investors believe the team's manipulation of large amounts of funds under the guise of "anti-sniping" effectively blurs the lines between internal activities. Others point to the project's lagging public relations and information disclosure, fueling market panic.

For investors, if these wallets are intended to prevent sniping, they must have clear rules and advance notices; otherwise, ordinary users could still be "shaken out" by price fluctuations. However, currently, public on-chain data has not fully verified CJ's claims, and token transfer and transaction details lack transparency. Even if the team claims to have implemented mechanisms to protect retail investors, market trust still depends on whether the operations are fair and verifiable. The influence of social media opinions is particularly deadly in the decentralized world. Once trust is doubted, the market no longer needs the truth to price. In a high-profile event like a TGE, delayed communication and vague responses are more likely to destroy credibility than "wrongdoing" itself.

Figure 1.LMTS token price. Source: https://coinmarketcap.com/currencies/limitless-lmts/

The potential risks of the TGE model from Limitless

The Limitless controversy has once again highlighted the hidden dangers of the "TGE (Token Generation Event) model." This issuance method, originally considered open, fair, and transparent, has, in practice, exposed numerous flaws.

Information asymmetry between the team and the market

The original intention of a TGE was to allow more people to participate fairly in early-stage projects. However, in reality, teams and early participants often have information advantages and price control far exceeding those of ordinary users. They know the issuance schedule, initial price, and even the token distribution strategy in advance. This allows project owners or insiders to "control the market" at key points, leaving ordinary investors as the final recipients.

Lack of lock-up mechanism and transparent address management

In the Limitless incident, frequent transfers and unexplained operations within the project's wallets triggered market panic. The lack of a clear lock-up mechanism and address usage made it difficult for outsiders to determine the true whereabouts of these funds. This lack of transparency not only undermined market trust but also rendered the original purpose of the "TGE public offering" in name only.

The gaming risks of automated panic buying

In the DeFi world, sniping bots have become a near-standard feature of TGEs. However, if these bots are controlled by the government or internally, fairness is completely lost. Retail investors desperately buy, only to find that their entire quota has been swept up by official bots within a second. This kind of game makes the "open and fair" issuance scene seem more like a pre-scripted scenario.

Investor education and project transparency are disconnected

Most retail investors don't understand the logic of on-chain capital flows, and they struggle to determine the true purpose of project funds through block explorers. Amidst high information asymmetry, they are more likely to be swayed by social media sentiment and the opinions of influencers (KOLs), blindly following trends and ultimately suffering losses.

Structural Dilemma: A Test of Trust in Prediction Markets

Limitless's crisis of trust also exposes the structural challenges of the prediction market sector. Prediction markets are essentially a form of financial derivatives, highly dependent on liquidity and participant confidence. When market enthusiasm wanes or liquidity is insufficient, project tokens can easily become targets of speculation rather than reflect true value. The sharp price fluctuations of LMTS demonstrate that institutional innovation cannot fully address the trust gap. Without institutional support, the fairness and decentralization of prediction markets can easily be viewed as "another centralized banker game." Such projects, operating in a regulatory gray area, need to establish higher standards in information disclosure, fund custody, and transparent governance.

Conclusion

The Limitless incident once again demonstrates that in the era of on-chain disclosure, transparency does not equal trust. Without institutional constraints and behavioral norms, so-called public offerings can still devolve into an insider game.

The TGE model is undoubtedly a crucial tool for new project financing and community building, enabling more people to participate in early-stage innovation. However, when mechanisms lack constraints, capital flows are opaque, and project accountability is blurred, this model poses significant risks to users. Therefore, the TGE process also requires on-chain verifiability: token allocation, lock-up, and liquidity arrangements should be public. Exchanges or launchpads can implement third-party audits and fund segregation mechanisms to prevent unauthorized manipulation or premature sell-offs.

True trust should be built on a mechanism with clear rules, effective constraints, and equal rights and responsibilities. Project owners must disclose information and fulfill their promises; platforms must conduct strict audits and assume risk management responsibilities; and investors must exercise independent judgment and learn to identify risk signals, rather than blindly following emotions and influencers (KOLs).