The Bottomless Abyss of Leverage: When Billion-Level Funds Meet Extreme Trading

Derivatives market once again plays out extreme scenarios. Renowned trader Huang Licheng experienced 10 consecutive liquidations on a decentralized derivatives platform, with his account balance dropping from $1.3 million to just over $50,000 in a matter of hours. Behind this “meat grinder” style wealth destruction lies a deeper issue: how can someone replenish margin continuously after losing tens of millions of dollars? This is not luck; it’s a structural capital cycle.

Market Reality Under Extreme Leverage

In decentralized derivatives trading, Huang Licheng employed an aggressive strategy that most would find unacceptable: 15x to 25x leverage. This means a 4-6% market retracement would completely liquidate his position. Data shows this is no coincidence. In October 2024, his ETH long position was liquidated, turning a $44.5 million unrealized profit into a $10 million loss, with a total swing exceeding $54.5 million.

Even more astonishing: shortly after each liquidation, he could reinvest hundreds of thousands or even millions of dollars to rebuild positions. This pattern indicates that single losses do not threaten his overall solvency. Account wipeouts are superficial; his true capital reserves lie far beneath the surface.

The Three Layers of Wealth Structure

Layer 1: The Heavy Foundation of the Tech Industry

Huang Licheng’s wealth story begins in traditional tech. In 2015, he co-founded 17 Media (later renamed M17 Entertainment), which quickly became one of Asia’s major streaming platforms. In November 2020, just before the IPO, he announced his departure from the board, and the company repurchased his shares. The timing was perfect—just before the 2021 crypto bull market. This cash provided a solid foundation for his subsequent high-risk crypto investments and became the underlying support allowing him to absorb losses of tens of millions of dollars in a single hit.

Layer 2: Controversies in Early Projects

Beyond tech earnings, Huang Licheng also engaged in early crypto projects. Mithril (MITH), a decentralized social platform, was founded by him. Although the project ultimately became a joke—conceptual product with zero users, token price down 99%—initially, the team raised substantial capital through an ICO. Cream Finance (CREAM), a lending protocol he participated in, suffered multiple security breaches in 2021, losing up to $134 million.

While these projects failed, they reflect a phenomenon: during the ICO frenzy of 2017-2018, founders could rapidly accumulate crypto assets via token issuance, despite subsequent projects often failing. This accumulation laid the initial crypto asset base for him.

Layer 3: NFT Liquidity Factory

Even more interesting is the third layer—systematic arbitrage within the NFT ecosystem. Huang Licheng is a well-known collector of top-tier NFT series like Bored Ape Yacht Club (BAYC). As of June 2023, his associated wallets held NFTs worth over $9.5 million. But his strategy goes beyond mere collection:

• In February 2023, he sold 1,010 NFTs within 48 hours, creating the largest single NFT sale in history.
• He continuously converts proceeds from ApeCoin unlocks and Blur token airdrops into ETH or stablecoins.
• Using NFT collateralized lending protocols, he became the largest lender on certain platforms, with 58 loans totaling 1,180 ETH.

The core logic is: treat blue-chip NFTs as financial instruments, leveraging high-frequency trading, airdrop arbitrage, and collateralized loans to continuously convert NFTs into highly liquid crypto assets, fueling his derivatives trading “ammunition” stockpile. During Blur mining, he lost about $2.4 million but offset this loss through airdrops and liquidation of other assets.

The Perpetual Motion Machine of Capital Circulation

These three layers form a closed-loop system:

Traditional tech cash flow → Early project crypto accumulation → NFT liquidity generation → Leverage amplification in derivatives → Rapid replenishment after failures.

Based on public data, considering only confirmed liquidations (over $54.5 million), plus his ability to quickly add hundreds of thousands of dollars in margin after each liquidation, it’s reasonable to estimate his unallocated liquidity reserves exceed $100 million.

The deeper operational logic is: when a capital channel is exhausted by high leverage trading, he immediately activates a new capital generation mechanism. By the end of 2024, he launched a new MACHI token project on Blast blockchain, claiming to have attracted $125 million from institutional investors through community funding. This new cycle again confirms his strategic pattern: exit old wealth forms → create new capital tools → complete capital renewal.

Platform Mechanics and Risk Amplification

It’s worth noting that the 10 consecutive liquidations are not solely due to market volatility but also stem from the structural features of the platforms themselves. Some decentralized derivatives platforms employ ultra-efficient matching engines, claiming millisecond-level execution. While this maximizes trading experience in stable markets, it becomes a “meat grinder” in volatile conditions—when markets plunge sharply, the mechanical liquidation process offers no room for manual intervention, causing high-leverage positions to explode instantly. Huang Licheng’s 10 consecutive liquidations partly reflect the systemic risk amplification inherent in these platform mechanisms for high leverage trading.

Warnings for Ordinary Traders

This case reveals several harsh truths for market participants:

Leverage Risks: 25x leverage means a 4% market retracement can wipe out an account. Even professional traders with billions in capital have lost tens of millions under such parameters. For ordinary traders, this level of risk is deadly.

Importance of Capital Depth: Huang Licheng’s ability to recover from losses of tens of millions hinges on diversified capital sources and deep liquidity reserves. Most traders rely on a single fund source—one liquidation can mean complete exit from the market.

High Efficiency as a Double-Edged Sword: Efficient trade matching benefits markets in normal times but magnifies risks during extreme volatility, making manual stop-loss impossible.

The Trap of Transparency: On-chain transparency means all operations are recorded and analyzable, attracting followers. When leading figures’ large positions are quickly liquidated, followers often become the last sacrifices in the “meat grinder.”

Conclusion

Huang Licheng’s story is not just about individual trading genius but exemplifies a structural phenomenon in modern crypto finance: how traditional wealth combines with native crypto assets to form a persistent capital cycle. His continuous bets, repeated liquidations, rapid replenishments, and new project launches create a complete capital chain loop.

However, this model is impossible for most market participants to replicate. In this market, always ask yourself: are you creating liquidity or merely providing it? For 99% of participants, survival always comes first—living to trade another day, not overnight riches. Extreme leverage and repeated liquidations should remind us to respect market risks, not be deceived by superficial “rebirth.”