LIBRA farce: DEX, insiders, and investors Crisis of Confidence and the way to the end

Author: Revc, Jinse Finance

Timeline Quick Review: LIBRA Event Overview

At 6 am on February 14th: Argentine President Milai’s official X account announced LIBRA Meme coin, and the price surged.

At 10:00 a.m. on February 14th: After reaching its peak, LIBRA price plummeted, with a trading volume of 1.2 billion USD in 4 hours.

At 11:30 a.m. on February 14, Mila deleted the LIBRA tweet, and the coin price accelerated to fall.

At 11:38 am on February 14th, Milai claimed to be “unaware of the LIBRA project” and condemned the manipulation behind the scenes.

February 14th, 11:36 noon: The LIBRA team clarified that KIP Protocol did not participate in the development of Milai.

On February 14th, 12:54 PM: Solayer founder exposes losses and reveals core members of KIP Protocol.

February 15th, 1:42 AM - February 17th: Jupiter, Meteora clarified that they did not participate in the issuance of LIBRA; Solayer founder continues to expose behind-the-scenes information; YouTube reporter revealed that the LIBRA team admitted to internal front-running.

On February 16, at 11:38 AM: The Office of the President of Argentina stated that it will investigate the issuance of LIBRA, with Mila requesting the Anti-Corruption Office to intervene.

On February 16, 14:24: The LIBRA relationship chart reveals the issuer’s multiple insider trading connections with meme coins.

On the evening of February 16: LIBRA advisor Kelsier plans to repurchase and destroy 100 million US dollars; the opposition threatens to impeach Milay.

February 17th - February 18th: Bubblemaps, Solayer founder accuses LIBRA of being manipulated by the MELANIA team; Coffeezilla reveals that the LIBRA team admits to frontrunning; Argentine law firm submits complaint to the US DOJ and FBI; Millet TV program responds with “acting in good faith”, and then reposts the LIBRA purchase tutorial.

Reexamination of All Parties’ Roles:

Javier Milei ( Javier Milei ) - Argentine President: From the initial platform promotion to rapid cutting and distancing, attitude reversal, complex role, his behavior directly influenced the market direction and trust of LIBRA.

Hayden Davis (Kelsier Ventures): LIBRA issuing consultant, actual operator, admitting to “sniping” behavior, but arguing it’s an industry norm and project protection, controlling a large amount of project funds, controversial refund plan.

KIP Protocol: The main sponsor of LIBRA, distancing itself from the relationship with token issuance and market making, emphasizing only providing technical support, trying to reduce the negative impact of the event on its reputation.

MELANIA Team: The biggest suspect behind the scenes, the on-chain evidence points to LIBRA and MELANIA operating as the same team, suspected of building a “harvesting chain” and conducting insider trading.

Jupiter & Meteora: The platform provider, Jupiter provides trading for LIBRA, while Meteora is used for token issuance. Both declare that they are only technical platforms, have no interest relationship with the project parties, and promptly clarify and maintain their reputation.

Chaofan Shou (Solayer Founder ): The core revealer of the LIBRA incident, who early on questioned and continued to track through technical analysis, exposed inside information, fueled the event, and was a victim himself.

Coffeezilla (YouTube journalist ): Deep interview with Hayden Davis, trying to uncover the truth, his interview content has become an important window for the outside world to understand the insider of the LIBRA event.

Investors ( retail investors): The biggest victims of the LIBRA incident, suffering huge losses due to FOMO sentiment and celebrity effect, with market trust plummeting to freezing point.

KOLs (Dave Portnoy and others ): Some KOLs (mainly in the European and American regions, the same below) have ambiguous roles in the incident, being informed in advance or participating in promotion, but with opaque information disclosure, damaging their credibility.

CEXs ( Centralized Exchanges ): The exchange’s coin listing review mechanism is once again being questioned, facing pressure to reflect and take on the responsibility of investor education.

VC ( Venture Capital Institution ): Although not prominent in the LIBRA incident, in the field of Meme coins, the role of VC is worth paying attention to, with its early advantages contrasting with retail investor risks.

1. Emotional Opposition and Trust Crisis: Multi-party Game Among Insider Teams, DEX, KOLs, and Investors

The core contradiction of the LIBRA incident is the complex emotional game and trust crisis among the insider team, DEX, KOL, and investors.

Investors vs. DEX: Investors are flooding into DEX to participate in MEME coin trading. As a platform, DEX lacks responsibility in terms of review, risk warning, and investor protection, leading to dissatisfaction among investors. Investors question whether DEX is pursuing traffic and transaction fee income, while allowing or even condoning high-risk MEME coin trading.

Investors vs. KOL: Some KOLs have played a ‘fueling the flames’ role in the LIBRA incident, using their influence for promotion, but with opaque information disclosure and even potential conflicts of interest. Investor trust in KOLs has plummeted, questioning their ‘independence’ and ‘objectivity’.

Investor Community: There is also emotional opposition between new investors and experienced old leeks. New leeks suffer heavy losses due to lack of risk awareness, while old leeks feel disappointed and angry about the chaos in the market. The investor community generally feels anxious, confused, and a collapse of trust.

This trust crisis has exposed the blurred boundaries of responsibilities of key roles in the ecosystem of the crypto community. DEX, KOLs, and projects must take on corresponding responsibilities while pursuing interests, and establish a more transparent and responsible industry ecosystem. Investors also need to enhance their risk awareness, participate in the market rationally, and not blindly believe in the ‘get rich quick myth’.

2. The Tragedy of Over-Financialization in the Cryptocurrency Industry

**The LIBRA incident rings the alarm again: **The speculation of MEME coins is a microcosm of the over-financialization of the cryptocurrency industry, the ultimate PVP game, and the interest group harvesting retail investors, which will ultimately harm the industry’s foundation. Only when Web3 truly develops application-layer real businesses can this situation be fundamentally improved:

Financialization vs. dApp Application: In the current cryptocurrency industry, a large amount of capital and energy are concentrated in financial speculation and speculative trading, while the development of Web3 entity applications lags behind, lacking truly commercial valuable and user-based application scenarios.

MEME coin is an extreme embodiment of “financialization”: MEME coin has no actual value support, completely relying on market sentiment and capital speculation. It is an extreme embodiment of speculative nature in crypto finance, and the LIBRA incident is the inevitable consequence of this extreme financialization.

Web3 applications are the key to breaking the game: The true potential of Web3 lies in building an open, transparent, and decentralized digital world, empowering various industries with blockchain technology to create real value, rather than just staying in financial speculation and conceptual hype.

dApp improves user experience and value precipitation: The development of Web3 applications can enhance users’ awareness and acceptance of blockchain technology, shifting their focus from ‘speculating on coins for wealth’ to ‘application value’, and promoting the true realization of the value internet.

Web3 needs to break free from the trap of excessive financialization and return to the original intention of technological innovation and application value creation. The industry needs to pay more attention to application layer and infrastructure construction, incubate more Web3 projects with practical application scenarios and user value, in order to build a healthier and more sustainable development ecosystem.

Three, Web3 Confronts Web2: The Dilemma of Business Models, Commercialization, and User Experience

The LIBRA incident also reflects that compared with mature Web2 products in terms of business models, commercialization, and user experience, Web3 projects still have significant gaps. The true “head-on collision” between Web3 and Web2 still faces many challenges:

Sustainability of the business model: Meme coin projects like LIBRA lack practical application scenarios and intrinsic value. Their value is entirely based on market sentiment and speculation, making it difficult to form a sustainable business model. The bursting of the bubble is inevitable.

Exploration of Commercialization Paths: The commercialization and monetization paths of Web3 projects are not yet clear, with a single profit model and excessive reliance on token issuance and transaction fees, making it difficult to support long-term healthy development.

The User Experience Gap: Cryptocurrency wallet operations are complex, trading barriers are high, and there is still a huge gap in user experience compared to the convenience and friendliness of Web2 products, which hinders the large-scale popularization of Web3. In the LIBRA incident, a large number of investors suffered losses due to their unfamiliarity with the rules and risks of the cryptocurrency market, reflecting a lack of user education and experience optimization.

Competition with Web2 Giants: In terms of user experience, maturity of business models, etc., Web3 projects currently do not have the strength to compete with Web2 giants. They are at a disadvantage in terms of traffic, user habits, etc. For Web3 to truly ‘go head-to-head’ with Web2, it still needs to continue to break through in business model innovation and user experience enhancement.

The future development of Web3 relies not only on technological innovation but also on the maturity of business models and the improvement of user experience. How to build a sustainable economic model, explore diversified profit models, reduce user entry barriers, improve user experience, is the key to the popularization of Web3. The LIBRA incident also reminds practitioners that they cannot only focus on political and economic concepts hype, but also need to return to the essence of business, and improve the practicality and user-friendliness of Web3 applications.

Four, PVP Games and Insider Trading: The ‘Final Carnival’ of Zero-Sum Games

The collapse of Meme coins on public chains such as BSC and Solana, as well as the outbreak of the LIBRA incident, all indicate that the PVP (Player vs Player) game in the asset issuance field has reached a white-hot stage, insider trading has become an industry “unspoken rule,” and the market is staging a “final frenzy” of zero-sum game:

The essence of zero-sum game: The meme coin market is highly speculative, and the essence of the game of passing the buck is a zero-sum game. A very small number of “insiders” and early participants profit, while the vast majority of later retail investors are destined to become “bag holders”.

Professional ‘harvesting’ team: A specialized ‘harvesting’ team has emerged in the market, forming a complete ‘cutting leeks’ industry chain from project packaging, data falsification, wallet address allocation to KOL marketing, and the ability of retail investors to discern is relatively weak.

The normalization of insider trading: The meme coin issuance mechanism has inherent insider management loopholes, and insiders such as project parties, KOLs, and exchange insiders can easily obtain insider information, conduct advance layout and benefit delivery, making insider trading almost a ‘hidden rule’ in the industry.

The ‘final moment’ of PVP game: The adverse effects of the LIBRA incident, as well as the awakening of investor protection awareness, indicate that the extreme PVP game mode of Meme coins may have come to an end, and the market urgently needs a healthier and more sustainable asset issuance and trading model.

The LIBRA incident is a concentrated outbreak of PVP games and insider trading chaos in the Meme coin market, as well as a profound wake-up call to existing market mechanisms and participants. Excessive speculation and zero-sum game models will eventually be unsustainable, and the market needs to return to value investment, establish a more fair and transparent trading environment, in order to rebuild investor confidence and promote the healthy development of the industry.

V. Evolution of Cryptocurrency Issuance: From POW, POS, Friendtech to the Fission and Bubble of Pump.fun

The evolution of blockchain asset issuance methods is a history intertwined with technological innovation and market competition. From POW to Pump.fun, the issuance threshold continues to decrease, and participation continues to increase, but it also accelerates the inflation of market bubbles:

POW (Proof-of-Work) - Proof of Work:

Issuance method design: Competing for the right to bookkeeping through solving hash puzzles, the successful one will receive block rewards (new coins), relying on computing power competition and energy consumption.

Participation threshold: high, requiring professional mining machines, power resources, and technical knowledge. Early participants are mainly technical geeks and professional miners.

Consensus aggregation: Based on cryptography and economic incentives, maintaining network security and operation through decentralized mining forms early community consensus.

Value basis: early consensus, scarcity, decentralization, and the narrative of being the ‘digital gold’.

Network operation: Relies on miners to maintain network security, transaction speed, and scalability are limited.

Evolutionary significance: Establishing the foundation for the issuance of encrypted assets, establishing the principles of decentralization and fair issuance, but the high threshold restricts the participation scope.

POS (Proof-of-Stake) - Proof of Stake:

Issuance method design: Users who hold tokens and stake them will receive accounting rights and interest rewards based on the proportion and duration of holding, reducing the reliance on computing power.

Participation threshold: medium, reducing the hardware and energy threshold, but still requires holding a certain amount of tokens and technical knowledge, expanding the range of participants.

Consensus Cohesion: Based on the rights and interests of coin holders and community governance, token holders participate in network maintenance and decision-making, forming a broader community consensus.

Value Foundation: The consensus mechanism is more energy-efficient and environmentally friendly, improves network performance, expands application scenarios, and shifts the value narrative from ‘digital gold’ to ‘value Internet infrastructure’.

Network operation: improving transaction speed and scalability, reducing energy consumption, but may involve centralization risks and the ‘rich get richer’ effect.

Evolutionary significance: Improve network performance and scalability, reduce participation threshold, promote the prosperity of the public chain ecosystem, but the token distribution and governance model of the POS mechanism still need to be improved.

Friendtech - Social Token:

Issuance mechanism design: Based on social relationships and KOL influence, users purchase ‘Shares’ to support KOLs. KOL income is tied to the value of Shares, tokenizing individual influence.

Participation threshold: low, users only need to have social accounts and encrypted wallets to participate, making issuance more convenient and social.

Consensus Coagulation: Based on KOL’s personal influence and fan economy, the initial consensus is established rapidly, but it also highly relies on KOL’s personal reputation and continuous operation capability.

Value basis: KOL influence, fan economy, social interaction, the value basis is relatively fragile, easily affected by KOL personal risks and market sentiment fluctuations.

Network operation: Based on existing public chains (such as Base) operation, with strong social attributes, but the actual application scenarios and network effects still need to be expanded.

Evolution significance: Innovated the way of asset issuance, tokenized personal influence, expanded the boundaries of crypto asset applications, but also exposed the sustainability and value support issues of social token models.

Pump.fun - One-click Coin Issuance Platform:

Issuance method design: Extremely simplified coin issuance process, users do not need coding knowledge, can issue Meme coins with one click, and automatically inject liquidity.

Participation threshold: extremely low, almost zero threshold, anyone can issue coins, and the speed and convenience of issuing coins are maximized.

Consensus cohesion: Fully relying on market sentiment and FOMO effect, the consensus is established quickly but fragile, susceptible to market sentiment and ‘harvesting’ behavior.

Value Basis: There is almost no actual value basis, purely based on MEME culture and emotional value, highly dependent on market speculation and the expectation of “getting rich quick”.

Network operation: Based on public chains such as Solana, with fast transaction speed, but the security and decentralization are questionable, susceptible to manipulation by project parties and insiders.

Evolutionary significance: pushing asset issuance towards ‘popularization’ and ‘entertainment’, but also accelerating the expansion of the Meme coin bubble, market risks getting out of control.

Data evidence: MEME coin 24-hour wealth creation myth and bubble risk

Platforms like Pump.fun have lowered the threshold for coin issuance to freezing point. The issuance speed and wealth effect of MEME coins are staggering: MEME coins like LIBRA can skyrocket to tens of billions of dollars in market value within 24 hours, attracting countless investors to FOMO into the market, but also laying down huge bubble risks.

24-hour ‘wealth creation’ myth: LIBRA and other meme coins experience extreme volatility in the short term, staging ‘overnight riches’ and ‘instant zero’ scenarios, attracting speculators and ‘gamblers’ to enter the market.

The risk of bubble intensification: Platforms such as Pump.fun have contributed to the bubble of Meme coins, with a large number of low-quality, valueless Meme coins flooding the market, accelerating the expansion of the bubble, and ultimately unable to escape the fate of collapse.

Regulatory arbitrage and risk spillover: Low-threshold coin issuance platforms may engage in regulatory arbitrage, exacerbating market risks and spreading risks to the entire cryptocurrency industry.

Six, The Current Stage of the Market: The Dilemma of Nash Equilibrium and the End of the Model

The LIBRA incident and the chaos in the Meme coin market may herald the end of the current ‘rapid issuance of coins - emotional speculation - rapid collapse’ model for Meme coins, and the market is sliding towards the dilemma of Nash equilibrium:

Nash Equilibrium: In the current market, project parties pursue “quick harvesting,” snipers wait for the opportunity to “buy low and sell high,” KOLs provide “paid recommendations,” CEXs list tokens for profit, and retail investors then “FOMO into the market.” All participants are seeking to maximize their own interests in the zero-sum game of meme coins. However, the final result is the inefficiency, chaos, and continued erosion of investor confidence in the entire market. Similar to the classic game theory model of Nash Equilibrium, individual rational behaviors lead to collective irrational outcomes, causing the market to fall into a prisoner’s dilemma.

Unsustainability of the Pattern: The detrimental impact of the LIBRA event and the awakening of investor protection awareness make the ‘harvesting’ pattern of Meme coins difficult to sustain. Retail investors are no longer blindly FOMOing, the credibility of KOLs is declining, and CEXs may tighten the standards for listing. The ‘Meme coin getting rich quick myth’ is gradually being shattered.

The market urgently needs a new paradigm: The dilemma of the ‘Nash equilibrium’ in the meme coin market indicates that the market needs new innovations or paradigm shifts to break the deadlock, reshape investor confidence, and drive the industry towards a healthier, more sustainable development trajectory.

Seven, Looking Forward to a New Dawn: Health Asset Issuance and a New Industry Order

Although the LIBRA incident is a ‘pain’ for the cryptocurrency industry, it may also be harboring new hope:

**Short-term pains give birth to long-term needs: The chaos of MEME coins such as the LIBRA incident will impact investor confidence in the short term, but in the long run, it will prompt the market to rethink the drawbacks of the existing model, forcing the industry to accelerate transformation. Investors’ demand for safer, more transparent, and fairer asset issuance and trading models will become more urgent.

A New Stage of Healthy Asset Issuance Management: The era of the ‘barbaric growth’ of meme coins may come to an end, and the industry will enter a new stage of healthy asset issuance management. The market will pay more attention to project quality, value support, and long-term development, rather than short-term speculation and emotional harvesting.

Dawn of Light: The negative impact of the LIBRA incident may force regulatory strengthening, promote industry self-discipline, accelerate investor education, drive technological innovation, bring a glimpse of new dawn to the cryptocurrency industry after the MEME coin slump, and nurture a healthier and more sustainable future development.

Conclusion

The LIBRA incident is a mirror, reflecting the various chaos and deep-seated problems in the current encrypted Meme coin market. From emotional opposition, regulatory resistance, Web3 business model dilemmas, PVP games, and insider trading, to the evolution of asset issuance theory and the market’s Nash equilibrium state, the occurrence and evolution of the LIBRA incident have sounded the alarm for us, and also provided profound insights for the healthy development of the industry in the future. Short-term pains are inevitable, but in the long run, this crisis may become a turning point for the maturation and standardization of the cryptocurrency industry, and a new dawn may come after the storm.