SIREN, A Meticulously Designed Leverage Harvest
- Core Viewpoint: Using the SIREN token as a case study, the article exposes a "leverage scam" harvesting tactic prevalent in the current cryptocurrency market. This involves high levels of market manipulation and exploits price discrepancies between spot and futures markets. Its abnormal market behavior and operational patterns pose significant risks to ordinary retail investors.
- Key Elements:
- The SIREN token price once surged to nearly $5, with its market cap briefly entering the top 30. Its total liquidation volume reached approximately $23.25 million, second only to BTC, ETH, and XAU, indicating exceptionally high market leverage and volatility.
- Analysis indicates the token is highly manipulated, with on-chain data showing that market makers control up to 88.5% of the supply. They use small amounts of capital on exchanges with poor liquidity (like Gate) to create drastic price fluctuations, influencing futures prices to execute their harvest.
- The manipulators' tactics include pushing the price up to lure in short positions, then using the sustained negative funding rate to extract funds from shorts to further pump the price. On March 23rd, they created a 78% minute-level price swing with a trading volume of about $450,000, causing massive liquidations of short positions.
- This "harvesting scheme" model is not an isolated case. The article mentions tokens like $PIPPIN and $RIVER exhibiting similar price action, suggesting SIREN may not have completed its final "net-closing" phase (i.e., the manipulators closing long positions and dumping spot holdings to cause a major crash).
- Although DWF Labs was pointed to as a potential manipulator, its co-founder has denied involvement. Meanwhile, Binance has twice adjusted the weightings of various exchanges in the SIREN futures price index to mitigate the impact of single-market manipulation.
$SIREN, a token launched during the "Broccoli" era when people were guessing CZ's dog's name, and listed on Binance Alpha and futures, has almost been forgotten.
However, during the recent surge in online discussions about its "price explosion," this token's total liquidation volume across all platforms ranked 4th, only behind Bitcoin, ETH, and XAU, reaching approximately $23.25 million. If not for Trump's TACO move boosting gold's volatility, SIREN would have been 3rd.
The token's price once approached $5, corresponding to a market cap of about $3.675 billion, briefly squeezing into the top 30 of the total cryptocurrency market cap ranking, surpassing established tokens like OKB and UNI.
In a sluggish market, this is not the first time we've seen such a phenomenon. $PIPPIN, $RIVER, $BEAT, $MYX... By examining the questions surrounding $SIREN, what lessons can we draw from these similar situations?
Are "Leverage Scams" Predictable?
As early as March 5th, @c_ckoko posted a tweet pointing out, "$SIREN is clearly under absolute control of holdings. This is a cross-exchange method to harvest users."
His tweet effectively explains how this "leverage scam" operates: the poor spot liquidity on exchanges allows for creating large price swings with minimal capital, which then affects the Binance futures price for harvesting.
Furthermore, as suggested at the end of his tweet, the $SIREN futures price index was adjusted. At the time of his tweet, the weightings affecting the $SIREN Binance futures price index were: Gate spot 50%, Kucoin spot 12.5%, Binance futures 12.5%, Binance Alpha 25%. After that, following two adjustments, the current futures price index weightings are: Gate spot 25%, Kucoin spot 12.5%, Binance futures 12.5%, Binance Alpha 50%.
According to Arkham data, Gate's $SIREN holdings on March 22nd were only 64,000 tokens.
In such a situation, a trading volume of $100,000 could create a candlestick with nearly 40% volatility on a minute chart.
Looking at the open interest, $SIREN showed obvious anomalies starting from February 8th. The open interest, which had long hovered between $3-5 million, suddenly surged to $58.83 million.
Of course, abnormal signs do not necessarily lead to a specific inevitable outcome. After all, the chips are in the hands of the controlling whales, and we cannot be sure how they will execute the harvest.
Methodology
First is accumulation of holdings, hoarding a large amount of spot tokens while also opening large long positions to push the price higher.
On-chain analyst Ember (@EmberCN) aggregated the control situation of $SIREN and found that the portion controlled by whales, verifiable on-chain alone, was as high as 88.5%. If including the portion deposited by whales into CEXs, this number would be even higher.
The tweet above also suggested that DWF Labs might be the controller in this incident, but DWF Labs co-founder Zac denied this claim in a group chat.
After pushing the price higher, the whales lure in short sellers, then open short positions themselves to make retail investors believe a local top is forming.
From the funding rate chart above, it can be seen that starting from March 14th, $SIREN frequently exhibited high negative funding rates. Short sellers continuously paid fees to the whales' long positions, and the whales used these "free" funds to continue pushing the price higher. In the early hours of March 23rd, another violent fluctuation of 78% occurred on Gate spot within 10 minutes, corresponding to a trading volume of only about $450,000. The price of $SIREN surged from $2.75 to nearly $5. This means many people were liquidated.
At this point, $SIREN might not be finished yet. Looking at it mechanically, the whales could next close their long positions, dump their spot holdings, creating a massive bearish candlestick, and then close their short positions at a cost far lower than their opening price. Comparing the price movements of $RIVER, $POWER, and $BEAT with $SIREN in one chart, it seems $SIREN is still missing the final harvest.
As this article was about to be published, the speculation above was confirmed:
Conclusion
Regardless of whether the current market is sluggish, the emergence of such harvesting schemes is always negative. Admittedly, some skilled traders might manage to get a share of the whales' profits amidst the information fog, but for the vast majority of retail investors, it's nothing more than an utterly unfair gamble.
When such a blatant harvesting scheme once appeared among the top 30 cryptocurrencies by market cap, all I can do is sigh.
