Many people think that in scams, market makers make money by liquidating retail traders. In fact, in the logic of beginner-level trading, the main source of income is the counterparty side.

The key to making money is not about how much you can liquidate the opponent, but how much you can “load” into your contract.

When choosing a market-making target, they often pick projects with five “lows” characteristics: low activity, low open interest (OI), low liquidity, low market cap—ideally old coins or new coins with basically zero trading volume.

The reason is simple: this kind of coin is easiest to collect enough chips, achieving “highly controlled float.”

But precisely because of the “five lows,” no one in the market is really interested.

At that point, if the market maker wants to open a $1 position “long” with $1 million as the base position, it may take half a day and still can’t open even $100k—because there are no counterparty positions (no one matches you as a counterparty, no one opens shorts, and no one closes longs).

Since there are no counterparty positions, the market maker must “set up the scheme” themselves to lure retail traders in.

2. Spend money to pump,登上 “龙虎榜”
Assume a project starts at $1. The market maker has already absorbed enough chips. In the ideal case, the depth between $1 and $2 is $100k.

Then the market maker will spend $100k in real money to pump the spot market, pushing the price to $2.

The goal is to make this coin rise by 100%, successfully登上 the exchange’s “龙虎榜” (the gain leaderboard).

But during this spot rally phase, the market maker actually can’t open too much base position on the contracts—maybe even losing money during the process. Still, once it hits the board and the exposure is big enough, retail traders will be drawn in.

3. Use human nature to lure the enemy deeper

When retail traders see a “five lows” coin suddenly surge by 100%, what will they think?

Retail traders’ first reaction is usually: “It doubled, so it must be at the top—short it now!”

So retail traders start opening shorts nonstop. Those retail shorts are exactly the “counterparty positions” the market maker dreams of.

At this time, the market maker can naturally, at the $2 level, place that $1 million long base position into the market in batches. Retail traders short as much as they can, and the market maker’s long position fills as much as they short.

Once the base position is built, the first phase of the decisive battle begins—continuous ramping.

The market maker will increase marketing volume on social media (such as X). The more front and center the project is on the “龙虎榜,” the more retail traders are attracted. If retail traders think it’s up 1x and should short, the market maker pushes it 3x; if retail traders think 3x is enough, the market maker pushes it 5x. The more jealous and hard-headed retail traders short, the more their shorts turn into the market maker’s steady stream of profit.

When the price is pushed to $5, the market maker wants to “close and realize” the long positions. But then they may face another problem: there might be no retail traders left to take the other side (not enough long positions or short-closing positions to serve as counterparty liquidity).

As a trader with highly controlled float and command of liquidity, the market maker has two options to complete the harvest:

Option one: dump-and-close (one wave ends)
1. At the high of $5, the market maker opens enough short positions.
2. Then they疯狂 dump the spot market, forcibly smashing the price back to $2 using a dump approach.
3. Final outcome: the market maker not only profits from the long positions that ramped from $2 to $5 ($1 realized), but also profits from the shorts that dump from $5 back to $2 ($1 unrealized), and also makes the money from selling the spot at $5. After that, they just need to gradually close the $2 shorts.

Option two: range-bound shakeout and wash (cut another round)
1. At the high of $5, the market maker opens both longs and shorts at the same time, starts dumping—but doesn’t dump too deep (for example, down to $4 or $3.5).
2. By stimulating retail traders’ long sentiment through oscillations of a certain magnitude, then continue pushing upward to $6 or even higher.
3. In this way, the market maker can close all the long positions comfortably at a higher location above $5.

In contract trading battles in the coin market, liquidating the counterparty is not the only—and not the main—way for the market maker to make money. The real foundation is to set up the scheme and attract “enough counterparty positions” so you can smoothly build positions and exit.

If the market basically has no chips or liquidity, and retail traders blindly rush in to short without any safeguards, then in the eyes of a highly float-controlled market maker, they’re likely just fish on a chopping block, anyone can slaughter.

That’s also why, when facing a meteoric rise in a niche coin, blindly “hard-headed shorting” often leads to a miserable end—the underlying reason at the bottom level.