The pump-and-dump tactics of shanzhai contracts—have you truly seen through them?

The seemingly simple process of building a position actually hides a lot of complexity. Some have observed that professional trading teams typically use a dispersed order placement strategy—placing an order every 30 seconds on average, with each amount controlled between 100 and 500U. Why do this? To avoid market detection of large capital movements.

Spot position building mainly occurs on DEXs, which are essentially on-chain transactions. Large single orders can leave traces, so they mobilize over twenty different order accounts to rotate and distribute the trades. Once the spot position is basically established, the next step is to start pumping the price.

But there's more to the trick. Position building isn't limited to DEXs; it also involves simultaneous layouts on centralized exchanges like MEXC, Gate, KuCoin. Why? Because there are price differences between DEX and CEX, and arbitrage bots automatically balance these gaps. The operators exploit this mechanism to make the accumulation more covert and efficient.

During the pump phase, speed is crucial. They usually push the price close to double the initial cost before stopping, aiming to quickly move away from the cost basis. Then they enter a sideways consolidation—this is when true liquidity becomes active. Although sideways movement seems boring, it actually has a deeper purpose: to induce retail traders to open short positions, while the operators secretly accelerate long position building.

Have you recently noticed that shanzhai contracts often jump by dozens of points or even more in a single move? Many times, this is the logic—rapidly moving away from the cost zone. The operators buy while pushing the price up, seemingly building long positions, but in reality, they are continuously accumulating.

Here's the key point: long positions are not the main source of profit for the trading team. Retail traders often mistakenly believe that the operators are building longs and continuously pumping to earn funding rates and play the "shanzhai life." But the reality is far more complex. Building longs is just a small part of the profit-taking process. The real value extraction lies ahead.