In the decentralized world of blockchain , the digital currency exchange is at the top of the biological chain of the currency circle and is always the most centralized existence.
's popular "trading mining model" has pushed a number of emerging exchanges to the forefront, and has become a target of several investors and project parties for a time. This model has two major characteristics: 1. Transaction is mining, which means converting the handling fees generated by user exchanges into equivalent platform coins and returning them to users at an extremely high proportion. 2. Pay dividends for holding coins, that is, the platform returns 80% of the user's transaction fee income to the platform currency holders.
In just one week after FCoin made the "Trading Mining Model" famous, the number of imitators of "Trading is Mining" has jumped to more than 50. On July 4, according to reports from multiple media, an unknown exchange, Coineal, became popular overnight, claiming that its BTC and ETH trading volume exceeded Binance, Huobi and FCoin, which are both mining trading models. Since the exchange launched the platform NEAL on June 30 and launched the "providing liquidity, namely mining, holding coins and dividends" mode, it has achieved a surge in user volume and transaction volume in just 5 days. In some third-party statistics, it has even jumped to the top global trading volume of BTC and ETH for a time.
is such a "rising" trading mining platform. With the violent fluctuation and downward trend of the platform's currency price, it was unable to cash out the high dividends; only 15 days later, in rumors such as "order brushing", "scam", and even "pyramid schemes", it quickly ended like a meteor, like a meteor.
What happened in the past 15 days? [The chain is deep and digging] The column has conducted an exclusive compilation and investigation on this.
A bizarre market smash
As early as June 30, on the day the Coineal platform trading mining was launched, an extreme transaction rollback operation occurred. At 12 noon that day, the original time for the online currency and trading mining of the platform was scheduled to be launched. The noon announcement suddenly claimed that the platform had postponed the online time to 13:00 due to data maintenance. Until 19:43 that night, the business had not started on the homepage. The official announcement showed that the amount of mining was not displayed for the time being, but it was already in normal operation. Trading coin pairs with mining icons can be mined, and the first mining release will arrive as scheduled at 24:00 that night. The announcements have been delayed, but the price of platform coins has been rising. On the same day, the price of Neal platform currency rose from RMB 0.4 to RMB 1.32, an increase of more than 230%. However, after 24:00 that night, the price of the currency fell sharply to 0.09 yuan in just five minutes, a drop of 69.99%.
According to the description of Xiang Liandede App that night, in the official WeChat group of Coineal, the official explanation for the sharp drop in the coin price was that the operation error unlocked all Neals. It claims that it will roll back abnormal transactions on the second day and provide a certain amount of compensation to private equity investors. This round of abnormal transactions that caused a large number of investors to lose actual losses caused users to distrust the platform and concerns about the safety of funds to explode in a few days.
(K-line chart of price fluctuations of Neal platform currency)
chain Dede App observation, a few days after the Coineal platform officially started trading mining, a large number of articles began to spread the promotion content of "the trading volume of dark horse exchanges has jumped first", which made many investors begin to pay close attention to Coineal, the rising star. However, on the next day, on July 5, Coineal Coin NEAL ushered in another round of crazy price plunge, with a drop of more than 69%.
In this regard, the founder of Prism Capital, the "only designated investment banking consultant institution for institutional investment" in the Coineal white paper , explained in the Coineal private equity WeChat group: "This Neal price fluctuation was caused by the exchange's smashing of the market to clear more than 80 large miners. This move is also to protect the interests of retail investors. In addition, without an announcement on the official website, the platform reduces mining fees and controls the unlocking speed of Neal, so as to change the current unreasonable price situation, better stabilize the coin price and then restart mining."
In addition, in order to stabilize user sentiment, the official also stated that it will launch "automatic mining hosting services" to eliminate malicious order brushing and other behaviors, which is the "mining robot" mentioned by Coineal in its early publicity.
(Prins Capital Zhang Lu Iris' explanation of the market smash incident in the WeChat group on July 5)
is strange. The same public explanation for the reasons for the plunge in the price of the Japanese currency on July 5, Prism Capital, as the only designated investment bank adviser for Coineal, is completely contradictory to the content of the apology letter issued by Coineal on July 15.
Coineal official pointed out in this "Public Apology Letter from Coineal and Prism Capital Partner Chen Junhong" that before the price plunge began on July 4, Coineal issued a series of rules to limit malicious order brushing behavior to cause large miners to collectively smash and leave the market. Although the platform used all previous profits to take over at that time, hoping to withstand the decline, the price entered a decline and accelerated the increase in production, which further led to a decline in trading volume and price decline.
. Is this market smashing incident "the exchange actively smashed the market" or "the big miners actively smashed the market"? The chief consultant and the platform have different opinions on this, and they are becoming more and more confused. Since the "trading mining model" is naturally easy to attract professional miners to enter the market to make arbitrage, according to Coineal's official statement, the exchange starts from its own interests and uses the method of smashing the market to clean up the mining tyrants in order to seize control. This behavior will directly sacrifice the interests of investors and users.
Chen Jie is an investor who entered the private placement stage of NEAL platform currency, and is also one of the many rights defenders after NEAL's break. He told Liandede App that the platform's act of privately cleaning up the mining tyrant in order to regain its control over the platform is not just. Moreover, the compensation promised to users due to the cleanup of the mining tyrant was not in place, so many rights protection groups were rumored that Prism Capital "runs away with the money".
In response to the accusation that many investors of Prism Capital ran away, the Coineal team responded to the Chaindede App, saying, "The platform is operating normally and has not run away. This is just a rumor that users in the secondary market are rumored because of losing money."
A string of listed coins issuance of capital interests
public information shows that the first online currency of Coineal Exchange is MT (My Token). Among the 10 exchanges launched by MT in the same period in April this year, the newborn Coineal, as the initial exchange, designed a series of marketing activities and gave away 1688MT for half a month. Users can receive MT and platform currency NEAL for registration, recharge, login, and transactions. This move greatly improves the liquidity of MT and rises by 300% in three days. With the appreciation of MT, Coineal trading platform has also taken advantage of the rapid rise of hitchhiking. As of press time, there were 17 exchanges online, and Coineal's MT trading volume is still the largest. Therefore, many investors contacted by the Linked Dede App agreed that Coineal has a very deep connection with the MyToken team.
As the exclusive issuing agency of MyToken, Prism Capital has also begun to enter the public's vision. According to the public information of its official website and previous media interviews, Prism Capital was co-founded by Chen Junhong and Zhang Lu. Investment projects include equity projects such as Mytoken, Golden Finance, Bitpai Wallet, EOS Gravitation Community, etc. Its founder Chen Junhong once said in an interview that the Coineal Exchange is a dark horse, and so far, the two projects MyToken and Coineal are not from the same team.
(Compiled by the public information of the two founders of Prism Capital)
So is Prism Capital really just a simple cooperative relationship with the Coineal Exchange as he said?
Coineal was founded in 2018. Its official publicity claims that the platform was created by senior blockchain practitioners, digital currency investors, and technology geeks from China and South Korea. The team has led and promoted multiple blockchain projects to quickly explore the markets between China and South Korea. The Coineal white paper shows that the only investment banking consultant for institutional investment is Spectra (Prism Capital), an investment banking institution that serves blockchain projects. According to the revelation of Coineal rights protection investor Chen Jie, Prism Capital, as a secondary distributor in the private placement stage of Coineal platform coins, publicly presided over NEAL's token issuance work.
(Explanation of Prism Capital in Coineal White Paper)
After the NEAL coin price plummeted sharply on July 5, Chen Jie and other early investors began to look for Prism Capital for an explanation. At the same time, the LinkedDede App found that the information of the founding team of the official website of Prism Capital began to become blurred, the founder's name was in English and the photos were vacant.However, it can still be judged based on information such as LinkedIn and public interviews. Chen Junhong and Zhang Lu are the founders and main persons in charge of the institution. This can also explain why Coineal's public apology letter on July 15 was published by Prism Capital partner Chen Junhong.
(public information of Chen Junhong and Zhang Lu in the official website of Prism Capital)
registered industrial and commercial information query on the Chainde App shows that Chen Junhong and Zhang Lu registered two technology companies in Beijing on May 29 and May 31 this year, one of which is called "Coinlier Technology Co., Ltd.", which has the same name as Coineal English transliteration.
"This coincidence makes people think that the Coineal platform is actually controlled by Chen Junhong and Zhang Lu of Prism Capital, and is not the 'senior blockchain practitioners of China and South Korea' mentioned in the announcement." said Chen Jie, a Coineal rights protection investor.
He further pointed out that when Coineal Exchange made major operational mistakes and closed trading mining mode (as shown in the previous article), the two partners of Prism Capital came out to explain and apologize immediately. The relationship between Coineal and Prism Capital team was far less simple than Chen Junhong said.
(other company registration information of Chen Junhong and Zhang Lu, founder of Prism Capital)
The short-lived "mining trading" platform
According to Coineal's white paper information, the main dividend methods are as follows:
A, providing liquidity mining: contributing liquidity to the system is mining, and the daily mining fee of users will be returned to the user with 100% of the equivalent value NEAL. Among them, 58% of NEALs are gradually allocated to trading users as mining reserves, and 21% of NEALs are owned by the Ecological Foundation through pre-issuance and will be used to develop investment value projects. The remaining 21% of NEALs are held by teams and private equity investors, and the private equity platform coins will be unlocked daily in a certain proportion.
B. Platform handling fee dividends: 80% of the platform's daily handling fee income is shared with each NEAL holder, and the amount of handling fee is shared based on the proportion of the user holding NEAL. The Coineal platform will update the transaction and dividend situation every hour, and will distribute dividends once every 12 hours, and will receive unified income at 12 noon and 12 midnight every day.
Compared with FCoin, the most popular exchange in "transaction mining", Coineal has two major differences in rule design. One is to upgrade "transaction mining" to "providing liquidity mining"; the other is to provide limited mining machine accounts, and the return rate of first-level account mining is as high as 150%.
provides liquidity mining. According to its official introduction, the advantage is that "in the liquidity mining system, Coineal will leave mining benefits to real individual investors in the early stage, and users will use time and labor to obtain income." Coineal believes that the mechanism of 100% return of transaction fees and an additional 20% reward for inviting registration in the FCoin model will attract a large number of order brushers and miners to arbitrage teams, which can make the platform transaction volume explode rapidly; however, once the mining income decreases, users will also sell platform coins and withdraw quickly, resulting in a rapid decline in platform transaction volume, the platform currency price plummets, and eventually the entire system will collapse.
provides a limited-edge mining machine account, that is, the user's account on the exchange is like a Bitcoin mining machine, and the account level is divided according to the transaction volume of different users, just like a different model of Bitcoin mining machine. According to the Coineal white paper, "The exchange will give users the greatest concessions, and the mining return rate is much higher than that of other exchanges." According to the level of different accounts, its "virtual computing power" can be divided into high or low, and the mining return rate will be much worse, but the white paper does not mention the limit and dividend quota.
However, these two so-called advantages have not made Coineal's development more stable and long-term. Under the complexity of actual transaction conditions and the continuous price decline, on July 14, according to the platform's "Announcement on Stop Output of NEAL and Destruction of Unexported Parts of NEAL" stated that since launched the "Providing Liquidity is Mining" model, NEAL circulating plates have rapidly increased at a rate of 8 to 10% every day, resulting in sharp fluctuations in prices. In order to avoid investors and miners continuing to face the risk of asset losses, the Coineal platform decided to stop the "Providing Liquidity is Mining" and "80% Income Dividend" model, and destroyed and publicly announced the NEAL tokens that have not been released.
(screenshot of the Coineal platform announcement on July 14)
At this point, the Coineal platform officially announced the end of the vigorous "transaction mining model" and "coin holding dividends" mentioned in the white paper.
htmlOn July 15, on the second day after the mining trading model was stopped, Chen Junhong, partner of Prism Capital, issued a public apology letter, which pointed out the biggest reason for the failure of Coineal's trading mining model, that is, the growth rate of demand for funds is much greater than the growth rate of asset prices. In the mining mode, in order to obtain price increases and to subsidize miners, a large amount of new funds are needed to influx. The demand for influx of new funds will far exceed the growth rate of the platform's real value, and in the end the entire platform will become a game of capital plates. Although the Coineal platform has tried to control production of Neal, it has no longer stopped Neal's continued decline. As of July 15, the platform was finally overwhelmed and suspended its trading and mining model. The price of Neal coin has continued to fall from 1.65 yuan on the day of opening to 0.15 yuan.(screenshot of the Coineal platform announcement on July 15)
Chen Junhong also reviewed the process and reasons for the sharp decline in the NEAL coin price in the announcement. The price decline of the coin price on the night of the first release was due to a line of code written incorrectly, all the unreleased parts of all investors were released, causing the market price to be abnormal in an instant, so the platform urgently stopped service and rolled back the data. A few days after
, the top miners made a lot of profits through the front-end buttons by brushing the transaction volume. In fact, small and medium-sized miners made very little profits, while the top miners accelerated the mining release speed of the entire platform. According to the growth rate at that time, the entire mine would be dug in less than half a month. The platform can only sacrifice the price of the currency and smash the market to clear the mining tyrants, but the mining model determines that the currency price trend is spiral. Once the price enters a downward trend, the platform's currency output will continue to increase, which will only further lead to a price decline.
However, in order to ensure that early investors have not released some of the interests, Coineal stated in the next announcement that a total of 100 million NEAL will be taken out, that is, the foundation has unlocked part of NEAL and NEAL that has been repurchased 20% of the platform revenue in the past two weeks, and corresponding compensation will be made based on the specific losses of each user account. The return of the unreleased part of the early investors is carried out according to the "number of unreleased NEALs"/"initial ETH redemption ratio".
provides liquidity mining, which means that all operations that users contribute to the liquidity of tokens in the exchange, including transfers, transactions, withdrawals, etc., can generate platform coins. In addition, the launch of the "highest configuration mining robot" will only accelerate the unlocking of NEAL and the surge in the number of platform coins, making it easier for miners with large amounts to quickly complete the coin distribution process and wealth accumulation, and further lower the price of platform coins. Therefore, this mechanism cannot "eliminate a large number of order brushers and quantitative trading teams" as the platform introduces, but instead adds more possibilities to the large amount of mine-out of platform coins. In the short term, the liquidity and trading volume of the exchange will increase sharply, but once miners who have mastered a large number of platform coins will withdraw centrally (i.e., the market crash incident on July 5) and sell large quantities of platform coins, the trading volume of the platform will drop rapidly.
As Chen Junhong said, the failure of the trading mining model of Coineal platform lies in the slow injection of new funds, that is, the real growth rate of transactions of new users is far from meeting the needs of platform operation. The real transaction volume is far from enough to make up for the platform liquidity gap caused by the loss of large miners. The funds invested by new users are just a drop in the bucket for the transaction volume required by the mining transaction model.The platform initially relied on publicity gimmicks to attract some new investors, but it lacked the motivation to attract new investors to enter the market in the later period, resulting in the injection of funds being much slower than expected, and gradually could not support the platform's operation. In addition, looking back at the entire incident, the platform's operation of smashing the market caused the following harms:
First of all, the market crash incident on July 5 is a solid evidence that the platform manipulates the market, and directly loses users' trust in the platform. This move not only caused the platform to lose its existing large miners, but also lost the trust of secondary market investors. No matter what reason the platform smashes the market, it will lead to the inevitable outcome of losing users.
Second, the sharp decline in the NEAL coin price caused by the market smash incident, coupled with the opacity of information such as platform dividends and mining progress, has exacerbated investors' concerns about the capital market. More investors are eager to cash out the platform coins, which has exacerbated the decline in the currency price.
Third, the above two points caused a significant decline in the currency price, which further made more investors and miners who were on the wait-and-see attitude towards the platform completely lose their interest in investment and could no longer attract new users to enter. This vicious cycle eventually led to the destruction of the mining trading model.
The transaction mining model with different ends is
In just over ten days when the Coineal platform started mining trading mode, the impact of mining mode startup on NEAL platform coins alone, the model startup did not actually contribute much to the increase in the currency price, and the NEAL price rise lasted only four days.
In terms of trading volume, the trading volume increased sharply at the beginning. With the continuous decline in prices, trading of the same funds will unlock a larger number of platform coins, which directly led to a decline in investor returns, seriously constraining the enthusiasm of coin holders and leading to a decline in trading volume.
is similar to Fcoin, which is the most successful attempt in the current trading mining model. Under the trading mining model, the price of the platform coins showed a clear trend: at the opening, the advertising volume of nearly the entire network was almost the coin gift mechanism and extremely high dividends in the first few days. Relying on this model, a large number of users were attracted to trade, resulting in a rapid increase in trading volume and a sharp increase in the price of coins. The duration of the currency price increase period during this period depends on the platform's financial strength. Since then, the exchange reward mechanism has changed, mining returns have declined, mining tyrants and investors have begun to withdraw one after another, selling platform coins, resulting in a rapid decline in platform trading volume and a plunge in platform coins. As the transaction volume increases and decreases rapidly, the price of the platform's currency will also rise and fall, which will lead to the real transaction volume of the platform's user that cannot be filled in time after the large miners withdraw. When the platform's funds are difficult to export, the price of the currency will continue to fall, which will eventually lead to the collapse of the entire system.
(Comparison of FCoin and Coineal platform currency price fluctuations)
Overall, under the trading mining incentive model, the platform currency price plays the most core element in whether the game can continue to expand and continue to play. In order to ensure the rise and volatility of currency prices are stable and controllable, the editor of Liandede has sorted out the current experiences and lessons learned in the market and can be divided into the following three operating methods.
1. Keep transaction information open and transparent
Under the transaction mining model, mining benefits and progress information disclosure are particularly important as the only informed channel for miners to grasp the progress of the platform. Coineal briefly disclosed information such as the two-day mining progress and the daily platform currency dividend quota before stopping the trading mining model. For more information released, such as related compensation and dividends, you will choose to spread it through WeChat community. Due to the lack of openness and transparency of various information, miners have reduced their trust in the platform, and a large number of miners are eager to sell and cash out after obtaining platform coins. This trend became more obvious after Coineal's mining tyrants smashed the market. The rapid decline in the currency price caused collective panic among users, which exacerbated the vicious cycle of the platform.
(Screenshot of Chen Jie questioning the amount of mining rebate for Coineal customer service)
2. The symbiotic relationship of miners' interests ensures the relative stability of the platform's currency price market
In the "Trading mining + platform currency dividend" mode, if the miner does not establish a certain degree of symbiotic interest relationship with the platform, it will be difficult to create conditions to maintain the stability of the currency price.One of the main reasons for the short life of the Coineal mining model is that the mining tyrant and the trading platform have an opposition relationship in the control of the platform coins. This trading model requires miners and exchanges to jointly ensure that the development of the platform currency price is controllable, and the maximum benefits caused by the currency price is the regulatory goal, so that the platform currency can fluctuate within a reasonable range. In this case, the currency price is controllable, which can also provide the value support basis for continuing to participate in the transaction mining and rebate policies.
3. Establish the final barrier to currency price regulation.
. Complete decentralization of the exchange can easily lead to the emergence of extreme market phenomena. In the field of digital currency exchanges under the trading mining model, it also needs to be adjusted through market and multi-centralized methods. FCoin and Coineal also experienced the market crash after the platform's currency surge, but FCoin made a breakthrough attempt in the stable currency price. In order to stabilize the price of the coin, Coineal has adopted the ability to suppress large miners to smash the market, and this kind of coin price regulation method is not advisable. FCoin has established the controversial flat fund . The original intention of this move is to calm down the violent fluctuations in the currency price that may be caused by the above reasons. This is also an important reason why FCoin has been criticized since launching the flat fund, but still insists on launching this mechanism to stabilize the currency price. Using a leveling fund to intervene in the market, regardless of the starting point, the result is similar to using economic means of "macro regulation" to intervene in the market. (This article is exclusively released on the Dede App, and Chen Jie is a pseudonym at the request of the interviewee)
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