(8.2 billion dollars hanging gallows: Who is hunting MicroStrategy? An analysis of a Bitcoin 'dismemberment plan' spanning Wall Street and the Middle East and a retail survival guide)
Chapter Five: The Two Long-term Bloodsucking Monsters in the Market
Exchanges and Market Makers
1. Market Makers
The main profit sources for market makers consist of the following segments
1. Institutional/large trader order execution (Agency Trading / Execution Services)
A large trader wants to sell 100 million dollars worth of BTC; dumping it directly would cause significant losses.
TWAP/VWAP strategy fee: Institutions pay commissions, and market makers execute orders in batches using precise algorithms without disturbing the market.
OTC Trading: Both parties price off-exchange (for example, at a 1% discount from the market price), and market makers take on this large order, then slowly digest it in the market using their liquidity advantage.
Profit: Fees + Trading Spread.
2. Market Making Agreements of Project Tokens
This is the most secretive and lucrative cash flow for market makers. When new coins go live (like HYPE at the beginning), the project party will seek a contract with Wintermute.
Option-based Loans: The project party lends 10 million tokens to the market maker, with an agreement that the market maker can buy them at $1.00 one year later (strike price).
Profit Logic: If the market maker can support/pump the token price to $5.00, they can buy at a cost of $1.00 and earn 5 times on the flip. This is why market makers are motivated to maintain price stability.
Retainer Fees: The project party pays tens of thousands or even hundreds of thousands of dollars each month just to ensure that market makers provide enough depth on their token order books to prevent the price from being crushed by retail investors with just a few thousand dollars.
3. Risk-Neutral Arbitrage
They do not bet on price movements; they bet on 'irrationality.'
Basis Trading: Buy BTC in spot, sell BTC in futures. Earn the premium between futures and spot.
Cross-Chain Arbitrage: In 2026, there are many public chains, and the same token may have a 0.5% price difference between Solana and Hyperliquid. Since they have ultra-fast cross-chain bridges (or are nodes themselves), this arbitrage is almost risk-free.
4. Venture Capital and Ecosystem Incubation
Market makers have the most sensitive flow data.
Early Bird Investment: Since I am going to make a market for your tokens, I will also participate in your seed round financing.
Insider-Level Information Advantage: They know which protocols are experiencing increased trading volume and which projects are running away. This 'God's eye view' gives them a much higher success rate in venture capital than ordinary VCs.
5. On-chain MEV and Node Income (Validator & MEV)
Market makers are often also validator nodes for large public chains.
Front-running and Lagging: Before on-chain transaction confirmation, use node advantages to adjust the transaction order and capture slippage profits.
Liquidity Mining: They will invest their own funds into vaults like HLP or liquidity pools of Uniswap V3, using algorithms to automatically adjust positions, earning high annualized returns that ordinary retail investors can never achieve.
6. Lending and Credit Distribution
Credit Business: Market makers lend large amounts of stablecoins or tokens they have accumulated to hedge funds or project parties that need to hedge at high interest rates.
💡 Why are they 'vampire monsters'?
Because they exploit the triple asymmetry of 'technology, information, and capital':
Technology: Their microsecond-level execution makes your manual actions look like slides.
Information: They can see the internal order flow of exchanges.
Capital: They can artificially create support or resistance with massive capital, inducing retail behavior.
II. Exchanges
In the market environment on February 9, 2026, exchanges (whether centralized like Binance or emerging DEX like Hyperliquid) are no longer just 'fee-collecting' counters; they are a combination of 'minting factories, casinos, courts, and banks' in the crypto world.
Breaking down the profit sources of exchanges can help you understand why native public chain tokens like HYPE have extremely high capture value. Here is a comprehensive breakdown of exchange profits:
1. Trading Fees — Basic Ration
This is the most transparent income, divided into Maker (limit orders) and Taker (market orders) fees.
Spot Trading Fees: Retail traders usually incur around 0.1% fees when buying and selling tokens.
Contract Fees (Main Part): Derivative trading volume is usually more than 10 times that of spot trading. Even if the fee rate is only 0.02%-0.05%, in the high-frequency trading environment in 2026, the daily cash flow generated can be extremely horrifying.
Withdrawal Fees: Every time you withdraw money, the exchange adds a markup on top of the on-chain cost.
2. Asset Listing Fees and 'Guaranteed Liquidity'
Ticket Money: New projects (altcoins) wanting to list on Binance or Gate need to pay millions of dollars in listing fees.
Forced Holding: Exchanges usually require project parties to give 3%-5% of the total token supply, under the guise of 'marketing costs' or 'liquidity margin.' When these tokens skyrocket, the exchange becomes the largest holder.
Internal Market Makers: Many exchanges (like early FTX) have affiliated market makers. When you trade on their platform, your counterparty is actually the exchange itself, which earns from your slippage and spread.
3. Liquidation Revenue — 'Blood Buns'
This is the fattest profit in extreme market conditions (like the K-line dancing you just saw):
Insurance Fund Surplus: When you are liquidated, the system takes over your position at a price better than your liquidation price. If the price at which the system ultimately trades in the market is better than your liquidation price, this price difference (residual value) will go to the exchange's 'insurance fund.'
Invisible Surplus: The interest and surplus generated by many large exchanges' insurance funds each year are themselves a net profit of hundreds of millions of dollars.
4. Lending & Margin Interest
Funding Wholesalers: Exchanges lend stablecoins on the platform to those going long and tokens to those going short.
Interest Rate Spread: It pays depositors 5% interest but charges borrowers 15%-30% interest. This 'spread' logic is exactly like traditional banks, but with lower risk (due to mandatory liquidation lines).
5. Interest Income from Asset Custody & Float
Idle Funds: Global users deposit USDC/USDT worth billions of dollars in exchanges.
Risk-Free Returns: Exchanges (like Coinbase or Binance) deposit these funds in banks or buy U.S. Treasury bonds (RWA). With a U.S. Treasury yield rate of 4%-5% in 2026, exchanges can easily earn hundreds of millions of dollars annually just from this 'idle money.'
6. IEO/Launchpad and Ecosystem Empowerment
Locking Users: Exchanges like Binance use BNB to participate in new token offerings. This not only locks in the liquidity of BNB but also encourages users to continuously deposit new funds to participate in new offerings.
Wealth Distribution: Exchanges decide who can get rich through Launchpad, thereby firmly grasping industry discourse power and traffic distribution rights.
7. Data and API Fees
Selling Shovels: Top quantitative teams (like Wintermute) need faster execution speeds and more detailed buy/sell order flow data. Exchanges charge these professional institutions expensive API dedicated channel fees or market data service fees.
💡 Why is Hyperliquid (HYPE) an outlier?
You must understand the disruption that HYPE brings to the above logic:
Decentralized Dividends: In traditional exchanges like Binance, all the aforementioned profits go into the pockets of Zhao Changpeng or other shareholders. In Hyperliquid, a large part of the fees and liquidation profits are distributed to liquidity providers like you through HLP.
Transparency: HYPE cannot modify your liquidation price in the background like CEX. All 'vampiric' processes are on-chain, and everyone can see how this 'shredder' operates.
Capture of HYPE Tokens: As exchange revenues increase, the expectations for HYPE's buybacks, burns, or dividends will strengthen. Holding HYPE essentially means holding 'shares in this decentralized casino.'
For example, amid rampant rumors in the market about 'MicroStrategy (MSTR) being hunted' and 'liquidation,' as well as the already occurred bloodletting event by Yi Lihua's institution, exchanges (CEX/DEX) and market makers (MM) in this storm are not 'betting' on direction; they are exploiting the rules, speed, and residual leverage to harvest with no or very low risk. Here is a comprehensive breakdown of their profits:
1. Liquidation Penalties and 'Liquidation Rebates'
This is the most direct blood-and-guts harvesting.
Forced Liquidation: When retail or institutional investors (even entities like MSTR with leverage) have insufficient margins, the system will forcibly take over positions.
Exchange Profits: The exchange will charge a high liquidation penalty (usually 0.5%-1.5% of the total position value). This money does not go to the market; it goes directly into the exchange's insurance fund or income ledger.
Market Maker Profits: Market makers like HLP or Wintermute are usually the only ones taking on liquidation orders. They buy up the tokens of liquidated positions at below-market prices (discounted prices) and instantly sell them on another platform, earning risk-free profits.
2. 'Usury' of Funding Rates (Funding Rate Arbitrage)
During the hunting process, market sentiment can become extremely distorted.
Sentiment Premium: If the entire market is crazily shorting tokens related to MicroStrategy or BTC, funding rates can become extremely terrifying (negative).
Vampiric Logic: Market makers will go long (taking on short positions), and they do not care if the token price drops slightly, because they can collect substantial interest from short positions every 1-8 hours. In extreme market conditions, annualized interest can reach as high as 500%-1000%.
3. 'Instant Expansion' of Bid-Ask Spreads
As you observe the 'K-line dancing':
Artificially Creating Depth Shortage: At the moment of liquidation, market makers will remove middle orders, causing the bid-ask spread to widen from 0.01% to 2% or more in an instant.
Profit Method: Want to stop loss? You can only sell to the bottomless buy orders; want to short? You can only buy at high sell orders. Market makers extract every impatient liquidity from this vast gap between 'buying and selling.'
4. 'Hunting' Specific Arbitrage of MicroStrategy: MSTR Premium Harvesting
There is a premium (Premium) between MicroStrategy (MSTR)'s stock price and BTC.
Hunting Methods: Top market makers (like Jump Crypto, Jane Street) will short MSTR and go long BTC to harvest premium regressions.
Exchange Coordination: Exchanges attract retail investors into speculation by listing various MSTR tracking tokens (like those uncollateralized contracts you mentioned). Every time a retail investor opens a position, the exchange earns a fee; every time a retail investor gets liquidated, market makers pick up cheap tokens.
5. Oracle Manipulation and 'Stop-Hunting'
This is the darkest part:
Targeted Blast: Exchanges and market makers have a 'God's eye view,' they can see where everyone's stop-loss orders are.
Execution: Just need to sell a large amount of funds at the moment of weakest liquidity, crashing the price into that 'stop-loss dense area.' Once the chain reaction is triggered, the price will self-destruct, and market makers can leisurely pick up all the cheap tokens at the bottom.
6. MEV (Maximum Extractable Value) Harvesting
In on-chain exchanges like Hyperliquid:
Front-running: When the system detects a large liquidation order about to enter, algorithmic bots will trade ahead of it or quickly hedge behind it. This millisecond-level profit is eroding the capital of ordinary traders.
Summary:
Market makers earn from 'certainty,' not 'direction.' As scavengers, we should also pursue certainty.
Exchanges are the only 'perpetual motion machine' in the entire crypto ecosystem. As long as there are speculators, they will always be profitable.
You are now sitting in the position of 'exchange shareholder' through HLP. Compared to predicting price movements, this model of 'collecting taxes while standing on the shoulders of giants' is the most stable path.
