I. $LIBRA Crash: A Crisis of Trust Caused by Insider Harvesting
On February 15, 2025, the meme coin $LIBRA backed by Argentine President Javier Milei experienced an epic collapse. The token price plummeted 96% from its peak of $4.61, with the market cap evaporating from $4.5 billion to $200 million, and a trading volume of $1.2 billion was recorded within just 4 hours.
According to Lookonchain monitoring, 8 wallets related to the LIBRA team withdrew USDC and SOL from exchanges a few hours before the tweet was posted, then targeted the tokens at the moment of launch, and subsequently sold them in batches, obtaining 5.76 million USDC and 249,671 SOL (about $49.7 million) through increasing liquidity, removing liquidity, and charging fees, for a total of about $107 million in cash.
This crash caused massive losses for many KOLs, with some calling for legal action, and industry OGs believing the industry will "be wiped out." But as a blockchain purist, we should reflect: can technology cure the greed of human nature? When regulation lags behind innovation, only more advanced tools can rebuild market fairness.
II. The Industry Paradox under the Scourge of Rug Pulls: Crisis Breeds Innovation
In April 2024, there were 18 presale meme rug pulls on SOL, totaling $26.7M, and by May it was 41 projects with a total of $102M.
Ironically, the industry did not perish, but instead gave birth to Pump.fun - a launch platform that became a sensation due to its "un-rugpullable" pools. Its core logic is simple yet deadly: through technical lock-up of liquidity, it makes meme projects rug-proof.
By June, the easy-to-rug presale meme projects had basically disappeared due to the explosion of Pump.fun.
In July, Pump.fun's trading volume reached its first peak, with a single-day revenue of $2.31 million, even surpassing Ethereum's daily revenue ($2.29 million), becoming one of the biggest engines of this bull market.
This reveals a cruel truth: the market does not reject risk, but hates unfairness. When fraud is rampant, users will vote with their feet, and protocols that truly solve the problem will be rewarded with outsized returns.
III. Lessons from the US Stock Market: How Short-Selling Tools Can Make the Market Healthier
The development history of the traditional financial market provides important insights for us. The reason why the US stock market has become the most stable and growing market in the world is inseparable from its mechanism that allows short-selling. Hedge funds represented by Muddy Waters, through in-depth research, exposed corporate fraud (such as Luckin Coffee), and squeezed out the "boils" in the market.
The value of short-selling:
Price discovery: Short-selling forces balance market sentiment and suppress bubbles.
Market purification: Short-sellers, by exposing fraudulent behavior, eliminate low-quality assets.
Long-term stability: After allowing short-selling, the US stock market's transparency and investor confidence have improved significantly.
The blockchain market also needs such a balancing mechanism. Likwid can provide the infrastructure for the Web3 version of "Muddy Waters" - through native short-selling tools, it will make insider players nowhere to hide.
IV. The Solution: How Native Short-Selling Tools Can End the Tyranny of Insiders
To cure the $LIBRA-style collapse, we need to undermine the monopolistic advantage of insider players from a systemic perspective. The existing DeFi leveraged trading products, due to their reliance on oracles, can only support mainstream assets and cannot cover long-tail tokens.
Likwid's answer: build a permissionless native short-selling protocol based on Uniswap v4.
Technical core: Through the formula **(x+x')(y+y')=k**, it unifies lending and trading, allowing users to establish short positions at the moment of token launch.
Anti-manipulation design:
Truncated oracle: Set price fluctuation limits within each block to prevent flash loan attacks (proposed by Uniswap in 2020, Likwid is the first to implement).
Dual liquidation model: Combining "repayment-based" and "swap-based" liquidation mechanisms to solve the problem of large-scale token liquidation, protecting LP interests.
Dynamic fee rate: Redistribute arbitrage profits to liquidity providers (LPs) instead of MEV bots.
Effectiveness verification:
Targeting insider players: If Likwid existed, users who believe the price is overvalued could establish short positions before the insider players' massive sell-off of $LIBRA, and profit from the short position if the insiders sell.
Healthy price discovery: Short-selling forces naturally suppress bubbles and malicious manipulation, reducing the vicious cycle of "pump and dump".
LP revenue revolution: Three-fold earnings from fees, leverage interest, and liquidation penalties, attracting capital to be locked.
V. The Ultimate Form of the Web3 Market: Tools as Order
From Pump.fun to Likwid, the evolutionary history of blockchain proves: every crisis is a catalyst for technological breakthroughs. While traditional finance relies on laws and regulations, Web3 chooses to rebuild trust through code.
The Likwid testnet is already online, and it is providing users with a lot of testnet incentives. You can follow Likwid's Twitter to get relevant information. Click the link below to explore the first permissionless leveraged trading platform in Web3 right away: https://likwid.fi/
Epilogue: No Need to Wait for a Savior, Code is Justice
The collapse of $LIBRA is not the end, but the beginning of a new paradigm. When the tools are strong enough, the tyranny of insiders will be undermined - this is not idealism, but the inevitable consequence foreshadowed by Pump.fun's daily trading volume of $200 million and Likwid's receipt of the Uniswap Grants.
