Market manipulators may have earned more than $ 240 million last year by artificially increasing the value of Ethereum tokens, according to chains salysis.
The Blockchain Analysis Company investigated the 370,000 tokens launched on Ethereum between January and December 2023, of which 168,600 were available to act at at least one decentralized exchange (DEX).
It claimed that, in a certain month last year last year, less than 14% of all tokens launched in the following month achieved more than $ 300 DEX -Liquidity, and less than 6% of the tokens launched in 2023, are currently “above that threshold”.
Although this can be partially explained by the fact that it is currently a tough market to make money, part of this activity can be fraudulent, chain analysis argued. The company was looking for tokens that met three criteria that were linked to pump and dump schedule activity:
- The token was purchased five times or more by DEX users without a connection with the greatest holders of the token, which shows that it was given market traction
- A single address deleted more than 70% of the liquidity in the dex -liquidity pool of the token, indicating that the greatest holder has dumped the token. In most cases, the address deleted the liquidity of the token within the first few weeks after the launch
- Token currently has a liquidity of $ 300 or less, indicating that the market collapsed after removing liquidity
Chainalysis claimed a quarter (24%) from Ethereum -Tokens and 54% of those on a DEX met the above criteria. Although this was only 1.3% of the total trade volume on Ethereum -Dexes, it may have achieved market fraudsters, no less than $ 242 million in profit.
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Despite the high headline figure, individual tokens that are subject to this market manipulation produced on average only $ 2600 in profit. That said, the practice could undermine the market as a whole, chain analysis argued.
“Market manipulation, such as pump-and-dump controls, are destructive for the cryptom markets in the same way as they are for traditional markets. However, the inherent transparency of cryptocurrency offers the possibility to build safer markets,” concluded it.
“Market managers and government agencies can use monitoring tools that can help areas identify and prioritize for further research in a way that would not be possible in traditional markets.”
Pump-en-Dump schemes usually include individuals or groups that heavily promote a token/share to stimulate the price before they are sold with a considerable profit. This often results in a severe decrease or even collapse of the price of an active, which influences non -processing holders.