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What I really don't understand about this shitcoins is the scale of it. When I read this story I basically thought "ok, but you're going to spend a load of mone

What I really don't understand about this shitcoins is the scale of it. When I read this story I basically thought "ok, but you're going to spend a load of money pumping but there's no way there's liquidity for you to actually perform your dump". But if you look up DOCK today you'll see its market cap is $14m and it's daily traded volume is $1.5m. I would get it that you could move some of these coins using a few bill boards and some sponsored ad reads if they were tiny volume traded, but the implication of this is that millions of dollars are moving back and forth every day on a coin that has absolutely nothing going for it. Who is doing that? There can't possibly be retail moving in and out of this stuff. Really I kind of assume this all has to be wash trading right?

rglullis 4y ago
Wash trading and bots.
sdfhdhjdw3 4y ago
I don't know.... What do you need to have a daily traded volume of $1m? Lets find examples. E.g. 1 - you need e.g. 1k people trading $1k Is that unrealistic? I don't know. The world is a very big place with a lot of stupid people. But wait! all of these morons use stupid leverage. Many of these platforms give you 100x. Yes, really. Here's a few more ways that you can get $1m daily: e.g. 2 - 1k people putting up $10 with 100x leverage e.g. 3 - 100 people putting up $100 with 100x leverage Neither of these look unrealistic to me.
- dwild 4y ago
  > - 100 people putting up $100 with 100x leverage You just made me realize how much cash trading platform probably are making using leverage. That explain why they were so quick to add theses coins. I'm curious to know how they manage the risk though.
  - sdfhdhjdw3 4y ago
    Hmmmm do fees scale with leverage? I don't know if that's true... My understanding is that leverage is profitable to trading platforms, not because the fees are bigger, but because bigger leverage is "more fun" and so people trade more. I don't know, you might be right.
    - cersa8 4y ago
      The fee is a percentage of the contract size, so higher leverage allows for bigger orders is higher fees.
      - sdfhdhjdw3 4y ago
        The contract size doesn't change with leverage. Do you mean a percentage of the notional value?
        cersa8 4y ago
        Sorry, you are correct, the fee is a percentage of the notional value.
- pbhjpbhj 4y ago
  How is the leverage working here beyond providing a convenient lie. 100x$100 is $10k no matter how much you lie that your shitcoin is worth 100x what people will pay for them. And that's diminishing your yield making it marginal whether you're matching your opportunity cost.
  - sdfhdhjdw3 4y ago
    > 100x$100 is $10k no matter how much you lie that your shitcoin is worth 100x what people will pay for them. It's not worth 100x. You don't understand how leverage works, clearly.
    - pbhjpbhj 4y ago
      Well, that helped. /s I thought leverage was effectively borrowing on anticipated gains. So I would spend $100 to, get credit to the tune of $10k, then buy my crypto with that. But, here we're talking about people buying a coin and the _seller_ saying the coin is worth 100x and so skipping the step of using fractional reserve to 'create' the funds (the loan amount) to exchange for crypto and just going straight to a deceit. With leverage there's a debt written to counter the credit, here that doesn't seem to be happening. So, where am I misunderstand the situation here?
      - sdfhdhjdw3 4y ago
        > But, here we're talking about people buying a coin and the _seller_ saying the coin is worth 100x and so skipping the step of using fractional reserve to 'create' the funds (the loan amount) to exchange for crypto and just going straight to a deceit. This is a meaningless word salad. You have an account with an exchange. Taking a position with leverage 100x just means that every time the instrument moves $1 up, your account goes $100 up, and when it moves $1 down, your account goes $100 down.
      - onlyrealcuzzo 4y ago
        > So, where am I misunderstand the situation here? It's pretty simple. They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. If the coin price goes down 1%, the borrower is wiped out. You don't need fractional reserves for leverage.
- SideburnsOfDoom 4y ago
  > E.g. 1 - you need e.g. 1k people trading $1k Or 2 people, who pass $1K "worth" of coin back and forth 1k times. it's more efficiently, as you can replace the people with for loops.
  - sdfhdhjdw3 4y ago
    Yes, the person I was responding to already said wash trading. You're just repeating what he said, you've added nothing to the conversation. My point was that wash trading isn't the only explanation.
    - prepend 4y ago
      I think wash trading is the explanation. Without regulation these numbers aren’t very useful because of wash trading. The real question is why only this amount of wash trading and why everyone doesn’t do a billion.
      - sdfhdhjdw3 4y ago
        My explanation, on the other hand, also explains why it's not a billion. So my explanation has more explanatory power than yours.
      - SideburnsOfDoom 4y ago
        > The real question is why only this amount of wash trading and why everyone doesn’t do a billion. You can't fool everyone all the time, but the transactions (volume etc) are likely intended to be realistic enough to fool some people sometimes.
- SilverBirch 4y ago
  Leverage can show you a short term source of revenue, but what we're saying here is a few things: Firstly, they're still going to be paying the fees and spread, so they're still losing tonnes on fees (and this is massive volume per day). That's just not sustainable, especially if people are getting wiped out with these pump and dumps, if it's done against people on leverage someone is going to be stuck holding the bag.
  - otherme123 4y ago
    On the pump phase, everything could work, even if it's not sustainable and even if everybody suspects that is not sustainable. I'm old enough to have lived the .com bubble as an adult, and almost everybody knew/suspected it was a bubble, and that 95% of the business would fall at some point in the near future. But if you believed that it would last at least one more year, and you can squeeze a 20% profit, and you can do it leveraged 10x... it's just too tempting to many. Fast forward 7 or so years, housing bubble, same tune: it was a main talking point, everybody knew it was a bubble and unsustainable, but very few predicted the burst to 2007 (and even the ones who did were the same that predicted it to 2004, 2005 and 2006). You are in 2004, everybody saying "this is a bubble" and waiting. In 2005 people still waiting looked like losers, while 2004 buyers laughed and I-told-you. Nobody wants to be a loser, and some people should beat the market or get fired. Only way to beat the market? Ride the bubble. And the rational way to ride a known bubble is leveraged: you enter the market, profit heavily, and ideally exit (it almost never works). You know you cannot ride a bubble expecting it to rise forever, you know it's going to crash, so you need to enter and exit ASAP.
xienze 4y ago
> There can't possibly be retail moving in and out of this stuff. There’s a couple different angles with these coins. First, there’s plain old hype where regular people see XX% gains in a day and jump in. There’s also groups that decide ahead of time to do coordinated pumps, which helps feed into the hype. There’s also a LOT of bots that follow these trends and also ones that simply gamble by buying up some amount of a coin the instant it appears on Uniswap et al, with the assumption that it’ll probably pump at least a bit in the short term.
Asparagirl 4y ago
Yup. Wash trading by bots is endemic throughout crypto, worse on certain specific exchanges but prevalent throughout. Very very little of the volume is from real live people buying or selling!
- 3np 4y ago
  Not necessarily wash trading (though it does occur), a lot of it is just perpetual chain reactions of bots. Remove exchanges with no or negligible fees from the calculation and the volumes for these coins tend to plummet.
- sosuke 4y ago
  I wonder if a bot limited exchange would be able to succeed?
Jasper_ 4y ago
Several exchanges will offer you wash trading bots as a service, for a fee. It's considered a marketing expense like any of the others.
- chollida1 4y ago
  Could you name these exchanges that offer wash trading bots? I'll do the leg work to verify the claim if you can site any exchanges.
- quickthrower2 4y ago
  I thought I had heard it all in crypto but that wins some scum award.
wpietri 4y ago
Wash trading aside, you're right that scams like this need new money. But consider who the target is here: would-be smart guys who are also would-be rich guys. In this new gilded age, we all know there are plenty of people getting wildly rich. Looking at who gets rich, and how quickly it can happen, it's easy to think, "What do they have that I don't have?" (There are answers to that question, of course, but not ones these people are eager to hear.) That's a view very much encouraged in the cryptocurrency culture, and in the day-trader culture that preceded it. That with smarts and a little luck, a guy can get the riches he was destined for. The people who fall for it of course never ask where the money is coming from, because if they did they'd figure out it was suckers like them. So when they see an ad that says, "ITS YOUR CHANCE TO BUY THE MOST POWERFUL CRYPTO COIN" they don't ask why the chance is specifically theirs. They don't ask what "powerful" could mean for a currency. They don't ask who's trying to convince them, or why the convincer can't even punctuate a sentence. They say, "Yes! It's my chance, just like I know I deserve!" And then they put in their engagement ring fund or the house downpayment fund or the money they borrow from family. And very shortly that money ends up in the pockets of assorted assholes, who are now better funded for their next scam.
- junofan 4y ago
  I think you’re way off on the psychology of participants. Lots play poker. Bluffing is normal.
  - metadat 4y ago
    Ok smart guy.
  - wpietri 4y ago
    Many do play poker, but most play at fair games of poker and they play it for fun. None of that applies to the suckers who bought DOCK based on market manipulation, which is generally a crime. [1] This is more equivalent to Three-card Monte, [2] which may look like a fair game involving cards, but which also preys on the would-be smart. [1] https://en.wikipedia.org/wiki/Market_manipulation https://en.wikipedia.org/wiki/Market_manipulation [2] https://en.wikipedia.org/wiki/Three-card_Monte https://en.wikipedia.org/wiki/Three-card_Monte
sorokod 4y ago
"The missing cryptoqueen" podcast gives a good idea of who the buyers could be.
simonw 4y ago
The YouTube channel that they bought a video on for $30,000 has 1.45 million subscribers. Edit: the video only got 40,000 views though. https://news.ycombinator.com/item?id=32068788 https://news.ycombinator.com/item?id=32068788
- SilverBirch 4y ago
  Yes, so basically certainly what’s happening here is the crypto guy bought subscribers so he looks popular so he can charge to shill. Scams all the way down.
  - pcl 4y ago
    There’s a certain poetic justice in that.

rglullis 4y ago

Wash trading and bots.

sdfhdhjdw3 4y ago

I don't know.... What do you need to have a daily traded volume of $1m? Lets find examples. E.g. 1 - you need e.g. 1k people trading $1k Is that unrealistic? I don't know. The world is a very big place with a lot of stupid people. But wait! all of these morons use stupid leverage. Many of these platforms give you 100x. Yes, really. Here's a few more ways that you can get $1m daily: e.g. 2 - 1k people putting up $10 with 100x leverage e.g. 3 - 100 people putting up $100 with 100x leverage Neither of these look unrealistic to me.

dwild 4y ago
> - 100 people putting up $100 with 100x leverage You just made me realize how much cash trading platform probably are making using leverage. That explain why they were so quick to add theses coins. I'm curious to know how they manage the risk though.
- sdfhdhjdw3 4y ago
  Hmmmm do fees scale with leverage? I don't know if that's true... My understanding is that leverage is profitable to trading platforms, not because the fees are bigger, but because bigger leverage is "more fun" and so people trade more. I don't know, you might be right.
  - cersa8 4y ago
    The fee is a percentage of the contract size, so higher leverage allows for bigger orders is higher fees.
    - sdfhdhjdw3 4y ago
      The contract size doesn't change with leverage. Do you mean a percentage of the notional value?
      - cersa8 4y ago
        Sorry, you are correct, the fee is a percentage of the notional value.
pbhjpbhj 4y ago
How is the leverage working here beyond providing a convenient lie. 100x$100 is $10k no matter how much you lie that your shitcoin is worth 100x what people will pay for them. And that's diminishing your yield making it marginal whether you're matching your opportunity cost.
- sdfhdhjdw3 4y ago
  > 100x$100 is $10k no matter how much you lie that your shitcoin is worth 100x what people will pay for them. It's not worth 100x. You don't understand how leverage works, clearly.
  - pbhjpbhj 4y ago
    Well, that helped. /s I thought leverage was effectively borrowing on anticipated gains. So I would spend $100 to, get credit to the tune of $10k, then buy my crypto with that. But, here we're talking about people buying a coin and the _seller_ saying the coin is worth 100x and so skipping the step of using fractional reserve to 'create' the funds (the loan amount) to exchange for crypto and just going straight to a deceit. With leverage there's a debt written to counter the credit, here that doesn't seem to be happening. So, where am I misunderstand the situation here?
    - sdfhdhjdw3 4y ago
      > But, here we're talking about people buying a coin and the _seller_ saying the coin is worth 100x and so skipping the step of using fractional reserve to 'create' the funds (the loan amount) to exchange for crypto and just going straight to a deceit. This is a meaningless word salad. You have an account with an exchange. Taking a position with leverage 100x just means that every time the instrument moves $1 up, your account goes $100 up, and when it moves $1 down, your account goes $100 down.
    - onlyrealcuzzo 4y ago
      > So, where am I misunderstand the situation here? It's pretty simple. They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. If the coin price goes down 1%, the borrower is wiped out. You don't need fractional reserves for leverage.
SideburnsOfDoom 4y ago
> E.g. 1 - you need e.g. 1k people trading $1k Or 2 people, who pass $1K "worth" of coin back and forth 1k times. it's more efficiently, as you can replace the people with for loops.
- sdfhdhjdw3 4y ago
  Yes, the person I was responding to already said wash trading. You're just repeating what he said, you've added nothing to the conversation. My point was that wash trading isn't the only explanation.
  - prepend 4y ago
    I think wash trading is the explanation. Without regulation these numbers aren’t very useful because of wash trading. The real question is why only this amount of wash trading and why everyone doesn’t do a billion.
    - sdfhdhjdw3 4y ago
      My explanation, on the other hand, also explains why it's not a billion. So my explanation has more explanatory power than yours.
    - SideburnsOfDoom 4y ago
      > The real question is why only this amount of wash trading and why everyone doesn’t do a billion. You can't fool everyone all the time, but the transactions (volume etc) are likely intended to be realistic enough to fool some people sometimes.
SilverBirch 4y ago
Leverage can show you a short term source of revenue, but what we're saying here is a few things: Firstly, they're still going to be paying the fees and spread, so they're still losing tonnes on fees (and this is massive volume per day). That's just not sustainable, especially if people are getting wiped out with these pump and dumps, if it's done against people on leverage someone is going to be stuck holding the bag.
- otherme123 4y ago
  On the pump phase, everything could work, even if it's not sustainable and even if everybody suspects that is not sustainable. I'm old enough to have lived the .com bubble as an adult, and almost everybody knew/suspected it was a bubble, and that 95% of the business would fall at some point in the near future. But if you believed that it would last at least one more year, and you can squeeze a 20% profit, and you can do it leveraged 10x... it's just too tempting to many. Fast forward 7 or so years, housing bubble, same tune: it was a main talking point, everybody knew it was a bubble and unsustainable, but very few predicted the burst to 2007 (and even the ones who did were the same that predicted it to 2004, 2005 and 2006). You are in 2004, everybody saying "this is a bubble" and waiting. In 2005 people still waiting looked like losers, while 2004 buyers laughed and I-told-you. Nobody wants to be a loser, and some people should beat the market or get fired. Only way to beat the market? Ride the bubble. And the rational way to ride a known bubble is leveraged: you enter the market, profit heavily, and ideally exit (it almost never works). You know you cannot ride a bubble expecting it to rise forever, you know it's going to crash, so you need to enter and exit ASAP.

xienze 4y ago

> There can't possibly be retail moving in and out of this stuff. There’s a couple different angles with these coins. First, there’s plain old hype where regular people see XX% gains in a day and jump in. There’s also groups that decide ahead of time to do coordinated pumps, which helps feed into the hype. There’s also a LOT of bots that follow these trends and also ones that simply gamble by buying up some amount of a coin the instant it appears on Uniswap et al, with the assumption that it’ll probably pump at least a bit in the short term.

Asparagirl 4y ago

Yup. Wash trading by bots is endemic throughout crypto, worse on certain specific exchanges but prevalent throughout. Very very little of the volume is from real live people buying or selling!

3np 4y ago
Not necessarily wash trading (though it does occur), a lot of it is just perpetual chain reactions of bots. Remove exchanges with no or negligible fees from the calculation and the volumes for these coins tend to plummet.
sosuke 4y ago
I wonder if a bot limited exchange would be able to succeed?

Jasper_ 4y ago

Several exchanges will offer you wash trading bots as a service, for a fee. It's considered a marketing expense like any of the others.

chollida1 4y ago
Could you name these exchanges that offer wash trading bots? I'll do the leg work to verify the claim if you can site any exchanges.
quickthrower2 4y ago
I thought I had heard it all in crypto but that wins some scum award.

wpietri 4y ago

Wash trading aside, you're right that scams like this need new money. But consider who the target is here: would-be smart guys who are also would-be rich guys. In this new gilded age, we all know there are plenty of people getting wildly rich. Looking at who gets rich, and how quickly it can happen, it's easy to think, "What do they have that I don't have?" (There are answers to that question, of course, but not ones these people are eager to hear.) That's a view very much encouraged in the cryptocurrency culture, and in the day-trader culture that preceded it. That with smarts and a little luck, a guy can get the riches he was destined for. The people who fall for it of course never ask where the money is coming from, because if they did they'd figure out it was suckers like them. So when they see an ad that says, "ITS YOUR CHANCE TO BUY THE MOST POWERFUL CRYPTO COIN" they don't ask why the chance is specifically theirs. They don't ask what "powerful" could mean for a currency. They don't ask who's trying to convince them, or why the convincer can't even punctuate a sentence. They say, "Yes! It's my chance, just like I know I deserve!" And then they put in their engagement ring fund or the house downpayment fund or the money they borrow from family. And very shortly that money ends up in the pockets of assorted assholes, who are now better funded for their next scam.

junofan 4y ago
I think you’re way off on the psychology of participants. Lots play poker. Bluffing is normal.
- metadat 4y ago
  Ok smart guy.
- wpietri 4y ago
  Many do play poker, but most play at fair games of poker and they play it for fun. None of that applies to the suckers who bought DOCK based on market manipulation, which is generally a crime. [1] This is more equivalent to Three-card Monte, [2] which may look like a fair game involving cards, but which also preys on the would-be smart. [1] https://en.wikipedia.org/wiki/Market_manipulation https://en.wikipedia.org/wiki/Market_manipulation [2] https://en.wikipedia.org/wiki/Three-card_Monte https://en.wikipedia.org/wiki/Three-card_Monte

sorokod 4y ago

"The missing cryptoqueen" podcast gives a good idea of who the buyers could be.

simonw 4y ago

The YouTube channel that they bought a video on for $30,000 has 1.45 million subscribers. Edit: the video only got 40,000 views though. https://news.ycombinator.com/item?id=32068788 https://news.ycombinator.com/item?id=32068788

SilverBirch 4y ago
Yes, so basically certainly what’s happening here is the crypto guy bought subscribers so he looks popular so he can charge to shill. Scams all the way down.
- pcl 4y ago
  There’s a certain poetic justice in that.