Article Rewrite:
According to my research, here is a brief summary of the roles in the on-chain liquidity game.
Developers and Insiders:
They were popular during the early AI hype when people didn’t fully understand AI but wanted to get in early.
They never completed more than 1% of their roadmap and relied on influencers to hype up their projects.
These teams usually allocated a large supply to themselves during contract launch and then distributed it before others. They would hide these tokens in multiple wallets and then sell them.
After an initial pump, they would slowly dump or encounter a bug after a few weeks of pumping and quickly exit after accumulating a large market cap (20-100 million).
They were involved in a group of fake projects that repeatedly released projects following the current popular narrative. These projects were often derivatives of larger, more successful venture-backed projects.
Programmatic Snipers:
Customized bots that systematically snipe multiple ETH projects.
Bots follow specific parameters based on smart contracts and trading volume.
The goal is to achieve 10-100x returns on a few projects from the many failed or exit-scam projects, almost like a form of profit.
Hand Snipers (ETH):
One of the most profitable on-chain traders.
They search for new contract addresses through research or internal messages.
They simulate contracts to check their security and determine other potential indicators or learn about the team background.
They outbid other snipers during promising contract launches.
They buy a large supply during promising on-chain or stealth launches of projects that lack anti-sniper defenses or do not use platforms like Fjord.
They use multiple wallets to hold a significant supply, exceeding 1%.
In many cases, projects are at the mercy of snipers who can crash them to zero in the early stages.
Many snipers compete against each other once they enter a project, hoping for “dumb money” to enter and then sell when the market cap reaches 500k-1 million, causing the project to die. This happens every day on the ETH mainnet.
By combining some fundamental analysis and machine learning, snipers who identify contracts that may launch with over 5 million market cap or more have performed significantly better than others in the past year.
Most snipers hold tokens for less than a few hours.
On-Chain Data Traders:
They track the actions of snipers and insiders.
They track profit (highest PNL) wallets.
They track trading volume and holder alerts.
They usually buy strong projects after snipers sell-off or even if they know snipers hold a significant supply, if the launch is very promising.
They usually do some basic analysis or narrative analysis on new launch projects.
Long-Term Holders:
As on-chain trading becomes a growing content sector in the field and more on-chain services are available for retail use, their popularity has diluted and increased.
They are the liquidity exit for the above participants.
These traders often play against each other on new launch projects that eventually go to zero. It’s just a matter of who gets in earlier.
They rely on Crypto Twitter (CT), Key Opinion Leaders (KOLs), or other later on-chain traders as liquidity exits.
Other Traders:
They haven’t learned to use Etherscan or how to check basic data metrics for tokens.
They get information from telegram groups, KOLs, and Crypto Twitter (CT).
They are slower traders who tend to buy hype.
They believe cryptocurrencies have utility beyond speculation.
They lag behind in narratives.
They have likely given up on buying new utility projects or meme coins. Or they are slowly starting to learn on-chain trading and gradually upgrade to the above categories.
Summary:
On-chain trading is a liquidity game for developers, snipers, on-chain data traders, and others. As liquidity decreases in the on-chain space, competition among participants becomes more fierce, resulting in the top of the pyramid reaping most of the rewards.
