Violent stock pull, ugly popularity. How do you view the DWF controversy?

 Author: Chen Mo, founder of BV DAO Source: X, @cmdefi

Recently, I have seen many big Vs talking about DWF. Combined with the narrative of this cycle and the changes in market sentiment, I found some interesting points of view. Is the entire Crypto from top to bottom being meme-ized and simplified, and is it in urgent need of a shot of stimulant?

1. Decomplication and emotional release

From the characteristics of this round of bull market, except for the institutional bull market brought by the passage of ETFs, the gameplay in other fields is "decomplication" and "de-disguise". To put it simply and crudely, the pursuit of "simple and high volatility" in this round of bull market has reached its extreme. Specifically,

• DeFi has been labeled as too complicated, and the more complicated it is, the easier it is to lose money.

• NFT used to be the target with the highest space for storytelling and pie-in-the-sky, but so far there is not even a sign of a second outbreak in this round.

The performance of these two king tracks in the previous cycle is very average in this round. There are many reasons for this phenomenon, including the stagnation of innovation and the loss of user confidence. After all, many people have experienced the collapse of FTX LUNA and the frequent security issues of DeFi. A bunch of monkeys are singing lonely in their hands. To rebuild market confidence later, fresh blood, time, and a shot of stimulant are needed.

This is the background of the birth of this round of bull market, which is extremely special and very polarized.

Therefore, the community-led characteristics of this round of meme coins are simple enough, emotionally venting enough, and highly volatile enough. These characteristics have the best time, place, and people.

2. Market makers and polarization

On the other hand, speaking of market makers, after the events of FTX, LUNA and other "elite" market makers in the last cycle, the results were also very tragic. The era when everyone saw San Arrows and Alameda and went all-in without thinking has passed. The market suddenly discovered that the altar of Crypto may really be a little more grass-roots than a grass-roots team. In such an environment, the controversial DWF came out in this round. DWF, which is known for only taking strong medicine, seems to be playing the role of a stimulant in this special era.

From the perspective of market makers, Crypto is still different from traditional fields:

• Scale: Compared with traditional financial markets, the operation scale of cryptocurrency market makers is relatively small.

• Liquidity and volatility: The liquidity of the crypto market is low and the volatility is high.

• Regulation: The regulation of the crypto market is not perfect, and the relationship between exchanges, project teams and market makers is complicated.

• Technology: Some market makers may involve some on-chain or DeFi financial strategies, so they need to have sufficient technical guarantees to support the security of their transaction execution.

3. What are the controversial points?

Traditionally, the main functions of market makers are:

(1) Providing liquidity: By continuously providing buying and selling depth, ensure that there is always liquidity in the market and investors can buy or sell at any time.

(2) Price volatility and discovery: Market makers help smooth market price fluctuations by adjusting bids and offers, while guiding price discovery.

(3) Improving market efficiency: By quickly matching transactions, market makers can reduce transaction delays and improve market efficiency.

Therefore, we usually think that a good market maker has strong capital strength, can provide sufficient liquidity and make price fluctuations smoother. However, DWF's style has always been characterized by high volatility. It focuses on market making but also invests in many projects. Therefore, DWF often causes controversy due to its aggressive trading strategy and is accused of market manipulation.

4. Give you what you want

In fact, DWF has captured the main emotions and power of users in this cycle in a very controversial way - "give you what you want", such as $NOT$FlOKI $LADYS, etc. In the current market environment, it is considered to have the right time, place and people. Although I am also a person who insists on long-termism and value investment, in fact, doing the right thing is not to sneer at memes, ponzi or anything with speculative attributes. Value investment is not an obsession, and long-termism is not high and mighty. I also often see many people who have a very thorough analysis of market conditions and problems. It is very remarkable to be able to see the problem clearly, but it is a true hero to be able to adapt to each era.

From the current special bull market, DWF has emerged in a very controversial way. It is unknown how it will go in the future and where it will go, but now it has made everyone in the market remember it.