The plum blossoms are blooming, and BR has also pulled the plug.

Written by: ChandlerZ, Foresight News

On July 9, Binance's Alpha project experienced a familiar flash crash. In less than 10 minutes, the star token BR in 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 crash can be described as "clean and swift." According to @ai_9684xtpa's monitoring, the liquidity section on OKX showed that before the flash crash occurred, the liquidity in BR's trading pool remained stable at a high level, exceeding 60 million dollars at one point. However, the outbreak of the event concentrated within a mere 100 seconds, during which 26 addresses almost simultaneously withdrew 47.59 million dollars in liquidity. Following that, 16 addresses initiated large token sell-offs, including 3 addresses at the million-dollar level and 13 addresses at the 500,000-dollar level, with centralized selling pressure instantly breaking through the liquidity, causing the price of BR to plummet, leaving only 14.56 million dollars in liquidity.

Here are the TOP 5 main addresses involved in the sell-off:

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

Who is behind the sell-off?

Analysis suggests that this sell-off does not appear to be the actions of the project team. First, regarding motivation, given the previous crash of ZKJ, such blatant actions seem too "obvious." This wave of large-scale trading is more likely aimed at entering a contract/spot market; secondly, regarding data, the main liquidity address of the project team, 0x5f6f70821362376928a67b91fa2179683fe48de7, still holds 4.685 million dollars in liquidity, with the last operation occurring on July 7, showing no activity during the crash.

The three main addresses involved in the million-dollar level sell-off were all newly created addresses from two weeks ago. After withdrawing funds from exchanges between June 24 and June 28, they directly began accumulating large positions in BR, indicating a clear intent and a single source of funds.

The information on the TOP 4 sell-off address, 0x58e837F8F9C1aCfE618AdbBa95314BE2ab55d19F, is relatively more abundant, with its funding traceable back to 2017, having interacted with established exchanges like Yunbi, Zhongbi, Liqui, and YoBit, making it a definite OG.

The methods used are not much different from the previous ZKJ crash, involving "instant withdrawal of liquidity + large sell-off + multi-address coordination." However, tracing the origins of the funds is quite challenging, as the main addresses have very singular funding sources.

The warning from the ZKJ flash crash

In fact, such operations have long been traceable. The ZKJ flash crash serves as a cautionary tale for BR's recent plunge. Just under a month ago, on June 15, the ZKJ token also experienced a drop of over 80% in a short period. According to a preliminary investigation report released by Polyhedra afterward, the ZKJ flash crash originated from multiple addresses coordinating to withdraw large amounts of liquidity from PancakeSwap V3 and then quickly selling off. This on-chain selling pressure directly triggered the liquidation mechanism on centralized exchanges, compounded by Wintermute transferring 3.39 million ZKJ to CEX in a very short time, further exacerbating market panic, ultimately leading to nearly 94 million dollars in forced liquidations. Notably, the ZKJ flash crash also occurred under the Binance Alpha incentive mechanism, resulting in a market structure with highly concentrated and unprotected liquidity. These highly similar characteristics almost overlap with the entire chain of events in the BR flash crash.

Currently, the BR project team states that they have not withdrawn liquidity and have made the liquidity addresses public, assuring users that they will not withdraw liquidity in the future and urging users to remain rational. They also 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 traders. During periods of significant price fluctuations, if users experience noticeable price differences 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 in the coming days.

Although the project team may not have "personally intervened," the inherent issues with the mechanism are hard to overlook. BR is one of the "score-boosting" tokens in the Binance Alpha project, where the project team attracts retail investors to provide liquidity to participate in Alpha activity point competitions through volume manipulation.

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

Concerns over Binance Alpha's liquidity mechanism resurface

The community's reaction to such events is becoming increasingly intense. Crypto OG @BroLeonAus quickly pointed out after the BR crash that the risks of this "volume manipulation + liquidity absorption" model have long been evident. As early as the initial stages of BR and AB projects, behaviors such as linear candlesticks, low trading fees, and continuous guidance for liquidity inflow were observed, exhibiting typical "score-boosting and liquidity absorption" tendencies. Now, both have shown signs of flash crashes almost simultaneously, proving to be prophetic.

In his view, the current point calculation rules employed by the Binance Alpha mechanism have obvious flaws, indirectly encouraging project teams to create superficial activity to gain platform exposure and rewards. Under this design, it is sufficient to create an illusion of "deep liquidity, stable trends, and low fees" on-chain to attract a large number of retail investors as LPs, leading to liquidity accumulation. The project team merely needs to "bait" and wait; once conditions are ripe, they can swiftly withdraw liquidity and realize profits, leaving ordinary users as the last holders.

BroLeon revealed that last week, the Bedrock team had communicated with him regarding promotional cooperation, and he explicitly proposed risk control suggestions, requesting third-party locking of project team liquidity to ensure user safety. However, the other party did not provide a clear response, and cooperation could not proceed. He emphasized that while there is currently no conclusive evidence indicating that the BR project team directly participated in this sell-off, the greater responsibility lies with the Binance wallet team, which has ignored the significant risks and loopholes in this rule.

The platform originally intended to benefit retail investors, but the actual situation has turned into the project team exploiting the mechanism's loopholes to harvest retail investors, which in turn has triggered 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 may become a "cash machine" for speculators. Alpha was once seen as Binance's positive exploration of the on-chain liquidity ecosystem, aiming to use platform incentives to encourage more users to participate in on-chain trading, increasing token activity and dispersion.

However, it now appears that the original design intent of this model has gradually been distorted. The incentive mechanism is not linked to locking or real liquidity, leading to rampant volume manipulation; project teams or short-term arbitrageurs can induce the market to create superficial prosperity without bearing much cost, ultimately completing a harvest in a state of lack of scrutiny and constraints. Without reform, relying solely on post-event compensation or explanations is unlikely to prevent the next "flash crash" from occurring.

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