Intrigue and enterprising follow any promising venture – even within chinks visible in the nascent armor of a layer 2 blockchain network. Case in point: Base, a testnet built by crypto exchange Coinbase on OP Stack, which opened its doors to builders as of mid-July. Even with a presently (at time of writing) inaccessible token bridge except to the Base network from Ethereum, crypto traders are tenaciously etching out hefty profits – but at what potential cost?
A prime example of inventive, albeit risky, trading comes through a token named “bald” (BALD) – allegedly funded by Coinbase staked ether (cbETH) – on the Base Network. In took merely six hours for BALD to achieve a $50 million market capitalization, and spike to an $85 million capitalization within a day. It’s worth noting that this was catalyzed predominantly by a tweet rumor from a Crypto Twitter user @cheatcoiner which incited an avalanche of interest – netting them over $1.4 million from an initial $500 investment. Mouth-agape figures indeed, but is all as it seems?
These ostensible successes infer a high rate of investor trust in these tokens. Yet, an insidious practice, commonly referred to as “calls,” are a masked trap for traders standing on the sidelines. This practice involves influencers hyping tokens, encouraging its purchase, only to offload their share on unsuspecting followers who inevitably sustain the crash. Thus, these market success stories generate a brushfire discourse among crypto traders regarding the likelihood of cbETH issuance by someone linked to Coinbase.
Additionally, the idea of insider trading is not unfamiliar within the crypto paradigm; it seems four crypto wallet addresses, likely tied to BALD’s developer, gained a staggering $1 million within a day, kindling further speculation of foul play.
While market liquidity is rising, with volumes surpassing $100 million for the BALD to Ether trading pair, there remain granite obstacles: chiefly, the limited directional flow of funds. Presently, there is no provision for the transfer of funds from Base to Ethereum officially. How much gain will traders be able to extract from this labyrinthine process? Only time will tell.
The ballet of the crypto market dances with grand jumps and falls – with bald tokens on a largely unproven testnet being a fine specimen. As we witness the gains roll, we must remember to also consider the potential pitfalls baked into the cake. How long will this crypto harvest last, and at what toll? The air of uncertainty girdles investors and spectators alike, as we continue observing this fascinating crypto landscape.
Source: Coindesk
