Written by: danny

The contract trading risk management of centralized exchanges is undergoing a indiscriminate raid on OI and account freezes. Professional players urgently need a trench that can withstand collateral damage risk management, support deep ambushes, conceal appearances, and strategize. And Aster, the protocol that carries high expectations, is it likely to become a new battlefield for large funds in on-chain contract trading, supported by a permissionless and robust BNBchain ecosystem during the industry's structural vacuum period?

The flames have ignited, the smoke has yet to rise, let’s see how you all respond?

“Everyone has to go through this stage. When you see a mountain, you want to know what’s behind it?”

1. Core Elements of Contract Harvesting

A successful contract harvesting operation must have two key factors: 1. Absolute spot control 2. Sufficient open interest (OI).

1.1 Spot Control: The Remote Control for Manipulating Index Prices

The market maker controls the circulation of the target token, turning the spot market into a manipulable "data board". Since the contract's index price is mostly derived from the spot price, and the index price is an important component of the mark price, controlling the spot is equivalent to controlling the mark price.

When the market maker controls the spot circulation, they need a minimal capital cost to greatly raise or crash prices in a market with weaker liquidity. These fluctuations in spot prices are immediately transmitted to the contract market via oracles, thereby changing the profit and loss status of contract holders.

1.2 Huge OI: The Basic Condition for Realizing Profits

In scenarios where direct offloading of the spot is not feasible (except when the spot is locked or severely limited, as the current spot market has basically no liquidity, and offloading would crash prices and be easily tracked on-chain), contracts become the only effective way for the market maker to profit.

Assuming the market maker invests $10 million, their cost on the spot side is rigid and includes transaction fees, funding fees, slippage, and price manipulation costs, among others. If the market maker cannot cash out on the spot side, they must earn at least $30 million from the contract side to cover costs and make a profit.

This explains why such a trading setup requires massive OI. Only if the contract positions are large enough can small fluctuations on the spot side generate profits sufficient to cover the trading costs.

2. Tears of the Times: Tightened Risk Management of CEX, Unable to Generate Huge OI

Limitations and Account Risks of Centralized Exchanges

With the increase in global regulatory compliance requirements, CEXs like Binance have strengthened their monitoring of abnormal account behaviors. For large funds, conducting high-intensity operations on CEX faces multiple obstacles:

Account bans and funds freezing: Due to anti-money laundering and compliance checks, frequent transfers in and out of large sums and abnormal trading frequency easily trigger risk management systems, resulting in accounts being banned or assets being frozen for long periods.

Position limitations (OI Cap): CEXs impose strict limits on the open interest of a single account or single token to prevent systemic risks, making it exponentially more difficult for market makers to establish large positions that could sway market expectations.

Takeover risk: In extreme fluctuations, the CEX's liquidation engines and insurance fund mechanisms could result in the market maker's positions being automatically taken over or forced to reduce (ADL), nullifying their original harvesting plans.

3. Aster: The On-Chain Derivatives Battlefield and Permissionless High Ground of Binance Ecosystem

With the strong backing of Yzi and CZ and the overlapping user base of Bnbchain and Binance, the ecosystem is not short of active trading users and market makers. Aster has carved out its battlefield in the PerpDEX track.

Aster's API interface is nearly identical to that of Binance, significantly reducing the learning and migration costs.

For traders, the Bnbchain ecosystem and Aster provide incomparable advantages that other CEXs cannot match. It is permissionless, meaning anyone can trade simply by connecting their wallet, and there is no risk of account bans. On Aster, market makers can "recklessly" open huge positions without worrying about interference from centralized platforms or "black box risk management."

This environment gives rise to a new narrative of "contract harvesting", where leverage of information asymmetry and capital advantage on a less liquid PerpDEX transforms the contract market into a "cash machine" for profits unattainable in the spot market.

4. The OI Anomalies Exemplified by Pippin

Pippin ($PIPPIN), an active AI-driven meme coin in early 2026, showcases the characteristics of this trading model. On-chain data indicates that internal holders of Pippin appear to control approximately 80% of the supply through 27 associated wallets, representing a typical case of high control.

On Aster, Pippin exhibited a massive OI that was completely disproportionate to its daily trading volume. Pippin's OI reached 71 million (actually should be 35.5 million), while the 24-hour trading volume was only 7.6 million, resulting in a volume/OI of only 0.214, which is a very bizarre phenomenon.

The logic behind this phenomenon is as follows: the market maker accumulates a large position in Aster without needing real turnover. When the market maker raises or lowers prices on the spot side (index price increases/decreases), their contract position on Aster generates massive unrealized gains, and due to the absence of centralized oversight, this "self-pumping and self-singing" behavior can continue until they find a sufficient counterparty to realize the profits.

5. Despite Poor Liquidity, Watch How I Turn Positions into Profits: Price Transmission and the Role of Market Makers

In a less liquid and lower-activity environment like PerpDEX (such as Aster), the market maker's core challenge is how to smoothly exit positions, i.e., "offload". However, on platforms like Aster with relatively weak liquidity, the smoothness and transmission of prices heavily depend on market makers and bots. How is this achieved?

Note: Aster's liquidity on specific trading pairs is actually very good and not inferior to CEX.

5.1 Cross-Exchange Price Transmission Mechanism

After the market maker accumulates a large OI position on Aster, they trigger price fluctuations by controlling the spot, resulting in not just unrealized gains within Aster (as well as position liquidations on Aster), but also transmission through the following pathways:

Oracle Trigger: Spot price changes -> Oracle updates -> Aster Index Price changes.

CEX Contracts Follow: As Binance is a liquidity center, the market maker induces fluctuations both in Binance Alpha and Binance Perp.

Spread Control and Transmission: The market maker artificially controls the spread between Aster and Binance through market-making bots. To avoid unilateral risk, market makers will transmit price pressure from Binance to Aster, while the market maker is waiting for this liquidity on the "data board" of Aster to achieve final profit realization.

Assuming the market maker is net long on Aster and creates an arbitrage opportunity by making the Aster price high and the Binance price low.

Based on regression to the mean theory, once arbitrageurs capture this opportunity, they will short on Aster while going long on Binance, thus allowing the market maker to smoothly transfer their position (short) to the arbitrageurs, achieving a profit, and vice versa.

For example:

While elevating spot prices, the market maker deliberately controls the spread between Aster and Binance (or other major exchanges).

(The above picture shows the quotes from Aster, the below shows the quotes from Binance. Please ignore the layout; the direct screenshots aim to show you these opportunities observable to the naked eye.)

Creating High Premiums: The market maker first exerts in the spot market while rapidly pushing up prices on Aster, making Aster's price significantly higher than Binance’s index price. (Aster's order book is thin, as shown in the image below)

Attracting Arbitrageurs: Arbitrage bots worldwide will rapidly catch this price spread. Based on traditional mean reversion logic, bots will anticipate that Aster's price will eventually drop back and anchor to Binance's price.

Therefore, these bots will short on Aster (and also earn funding fees) while going long on Binance, attempting to profit from the price difference.

Leveraging for Position Building/Reduction: At this time, the bots’ short positions on Aster, along with their long positions on Binance, become the counterparty of the long positions the market maker wants to close on Binance. The market maker utilizes this "market inertia" to smoothly transfer massive positions to these bots who think they are doing arbitrage trading.

Subsequently, these bots’ short positions become the fuel the market maker desires, as their short positions explode, transforming into the profits within Aster.

5.2 Price Transmission and Collaboration with Market Making Bots

The market maker's control over the spot not only generates profits within the venue but also leads to correlated fluctuations in Binance Perp. Since market-making bots usually adjust their quotes based on prices from multiple exchanges, the market maker's actions on Aster influence the inputs to the oracle, subsequently affecting global index prices.

This "price transmission" effect allows the market maker to launch an attack on a smaller, easily controlled battlefield (Aster) while drawing in players from larger, more liquid battlefields (Binance) to create liquidity harvesting.

5.3 Data Board and Genuine Activity

Coinglass and other analysis institutions have pointed out the discrepancies between transaction volume and open interest in Aster, along with extremely low liquidation data. This further confirms Aster's attributes as a “data board”.

Market makers do not require Aster to provide excellent organic liquidity; they only need Aster to provide a stable, non-banning, highly leveraged settlement board.

6. Limitations and Trading Costs

Although market makers possess significant freedom on Aster, this mode of operation comes at a cost. In addition to high funding rates (settled hourly), the friction due to insufficient liquidity also incurs substantial costs.

6.1 Expenditure on Funding Rates

On Aster, as the OI established by market makers often far exceeds that of natural traders, the long-short balance is severely disrupted. As primary long positions, market makers must continuously pay funding fees to their counterparts.

In extreme times, annualized funding rates can exceed 200%. This means market makers must complete the entire process of raising prices, inducing arbitrageurs, and offloading within a very short period, or else substantial interest expenses will rapidly erode their trading capital.

The above image shows that, when opening a long position, the daily funding fees on Aster are 0.64% higher than on Binance and 0.81% higher than on Bybit. If we consider a 30 million OI (Aster's nominal OI needs to be divided by 2), it means paying nearly $96,000 more daily to the shorts on Aster compared to Binance.

6.2 Liquidity Friction and Spreads

While Aster displays good performance in liquidity within PerpDex, the overall liquidity depth still significantly lags behind Binance. Large positions can incur substantial slippage during entry and exit.

Aster orderbook

Binance orderbook

It is worth noting that some trading pairs on Aster utilize dynamic slippage, where the magnitude of slippage is proportional to the current OI and the scale of new positions.

To cope with these slippage conditions, market makers often do not close positions directly on the order book all at once; instead, they introduce market makers (passive), over-the-counter (OTC) trading, or utilize the aforementioned arbitrage inducement strategies to offload in batches, minimizing slippage (twap).

What?! You ask me where Aster should develop next?

With the launch of the Aster Chain mainnet and the application of ZK privacy technology, future trading activities will become even more covert and untraceable—perhaps for Aster, this is the true meaning of Privacy.

Compared to transaction subsidies, volume manipulation, and 0 fees, this is the real need. If Aster can seize this window of tightening risk controls from Binance and other CEXs, creating its own derivatives battlefield for contract trading and capturing this opportunity, the future is promising.

“I want to tell him that when you climb over the mountain, you may find nothing special. Looking back, you might think this side is better, but he won’t believe it. He has to try it himself to be satisfied.”

— "Ashes of Time"

Postscript

The cruel follow-up that has been ignored: The second phase of the game

This script has an even crueler second half...

When the market maker completes their offloading, the market structure becomes: the market maker exits, arbitrage bots hold massive short positions, and prices remain in a high premium state.

There are two possible scenarios next:

Scenario A: Boiling the Frog (Funding Rate Trap)

Arbitrageurs expect prices to return quickly. But what if the market maker (or a new main force) chooses not to actively crash the price but to keep it at a high level for a long time?

Although bots holding short positions should collect funding fees, the market maker may have already accumulated enough profit during the rally to cover the initial funding fees. Even more terrifying is that if market sentiment is extremely frenzied, even if the market maker exits, retail investors' following buying pressure may sustain the high price. Their long positions opened on Binance may face ADL due to price fluctuations, but Aster does not have sufficient liquidity to unload.

Scenario B: Hunting (Short Squeeze)

After successfully dumping long positions to bots (transforming into the bots' short positions), the market maker sometimes engages in a reverse operation.

The market maker knows the largest shorts in the market are those mechanized arbitrage bots.

If the market maker (or in collaboration with other funds) strongly raises prices again in the spot and derivatives markets. The short positions of the arbitrage bots instantly face huge unrealized losses. Due to the bots' strict risk management and stop-loss lines (or insufficient margin), they will be forced to cover shorts at market price.

A flood of stop-loss buy orders from numerous bots will further push prices higher, triggering more stop losses. The market maker utilizes the "buy orders" generated from the bots' stop-loss to conduct secondary harvesting at a higher position (for example, opening new short positions).

In the end, after this tug-of-war, how much do you think the market maker made from Pippin???

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