With the issuance of new-generation cryptocurrencies such as Monad, MMT, and MegaETH, a large number of retail investors who participate in IPOs are facing a common problem: how to secure their high paper profits? A common hedging strategy involves acquiring the spot currency and then opening an equivalent short position in the futures market to lock in profits. However, this strategy often becomes a "trap" for retail investors with new cryptocurrencies. Due to the poor liquidity of new cryptocurrency contracts and the large amount of unreleased tokens in the market, unscrupulous individuals can use high leverage, high funding rates, and precise price manipulation to force retail investors to liquidate their short positions, reducing their profits to zero. For retail investors who lack bargaining power and OTC channels, this is almost an unsolvable game. Faced with attacks from market makers, retail investors must abandon traditional 100% precise hedging and instead adopt a diversified, low-leverage defensive strategy: (shifting from a mindset of managing returns to a mindset of managing risk). Cross-exchange hedging: Open a short position on a highly liquid exchange (as the primary locking position) and simultaneously open a long position on a less liquid exchange (as a margin call buffer). This "cross-market hedging" significantly increases the cost and difficulty for market manipulators, while also allowing them to profit from arbitrage opportunities arising from differences in funding rates between different exchanges. In the highly volatile environment of new cryptocurrencies, any strategy involving leverage carries risk. The ultimate victory for retail investors lies in employing multiple defensive measures to transform the risk of liquidation from a "certain event" into a "cost event," until they can safely exit the market. I. The Real Dilemma of Retail Investors Participating in IPOs - No returns without hedging, but being targeted by hedging. In actual IPO scenarios, retail investors face two main "timing" dilemmas: Pre-Launch Hedging: Retail investors receive futures tokens or locked-up shares before the market opens, rather than the physical commodity. At this point, contracts (or IOUs) already exist in the market, but the physical commodity is not yet in circulation. Post-Launch Restrictions: Although the spot funds have entered your wallet, they cannot be sold immediately and efficiently due to withdrawal/transfer time restrictions, extremely poor liquidity in the spot market, or exchange system congestion. Here's something I've dug up for you: Back in October 2023, Binance had a similar spot pre-market product for spot hedging, but it was discontinued, possibly due to the need for a launch pool or poor data (the first product listed at the time was Scroll). This product could have effectively solved the pre-market hedging problem; it's a shame it was discontinued. Therefore, this market version will see the emergence of futures hedging strategies—where traders anticipate receiving the physical commodity and open a short position in the futures market at a price higher than expected to lock in profits. Remember: the purpose of hedging is to lock in profits, but the key is to manage risk; when necessary, you should sacrifice some profits to ensure the safety of your position. The key to hedging: only open short positions at high-yield prices. For example, if your ICO price is 0.1, and the current contract market price is 1 (10x), then "taking the risk" of opening a short position is relatively cost-effective. First, it locks in a 9x return, and second, the cost for manipulators to push the price up further is also relatively high. However, in practice, many people blindly open short positions for hedging without considering the opening price (assuming an expected return of 20%, which is really unnecessary). The difficulty of manipulating FDV from 1 billion to 1.5 billion is far greater than that of manipulating FDV from 500 million to 1 billion, even though both involve a 500 million increase in absolute terms. Then the question arises: because of the current poor market liquidity, even opening a short position may still be targeted by attackers. So what should we do? II. Upgraded Hedging Strategy - Chain Hedging Leaving aside the complex calculations of the target's beta and alpha, and using correlations with other major cryptocurrencies for hedging, I propose a relatively easy-to-understand "hedging after hedging" (chain hedging?!) strategy. In short, it involves adding an extra layer of hedging to the existing hedging position. That is, when opening a short position for hedging, also opportunistically open a long position to prevent the primary short position from being liquidated. This sacrifices some profit in exchange for a safe margin. Note: It cannot completely solve the problem of liquidation, but it can reduce the risk of being targeted by market manipulators on specific exchanges. It can also be used for arbitrage using funding rates (provided that: 1. you set stop-loss and take-profit points; 2. the opening price is cost-effective; 3. hedging is a strategy, not a belief, and you don't need to follow it forever). Where should I open a short position? Where should I open a long position? III. Re-hedging strategies based on liquidity differences Core idea: Use liquidity differences to hedge positions. In exchanges with high liquidity and more stable pre-market mechanisms, opening short positions leverages the large market depth, requiring market makers to invest significantly more capital to liquidate short positions. This greatly increases the cost of sniping, serving as a key profit-locking point. Opening a long position on an exchange with poor liquidity and high volatility to hedge a short position on exchange A: If exchange A experiences a sharp price surge, the long position on exchange B will follow suit, offsetting any potential losses in exchange A. Exchanges with poor liquidity are more prone to sharp price surges. If the prices of exchanges A and B move in tandem, the long position on exchange B will quickly generate profits, potentially offsetting any losses in the short position on exchange A. IV. Calculation of Re-hedging Strategy Assume there are 10,000 units of ABC in the spot market. Assume the value of ABC is $1. Empty Position: Exchange A (Stable) $10,000 Long position: Exchange B (poor liquidity) $3,300 (e.g., ⅓, this value can be deduced from the expected return) Spot: 10,000 ABC, valued at $10,000 Scenario A. Price surge (market manipulation by large investors) ABC spot: Value increased. Short position on exchange A: Unrealized losses increase, but due to high liquidity, the risk of liquidation is much higher than in the previous scenario. Long positions on Exchange B: The surge in value offset the unrealized losses on Exchange A, resulting in relatively stable overall positions. (Proper stop-loss and take-profit orders should be set.) Scenario B. Price crash (market selling pressure) ABC spot: Value declined. A short position on exchange: Unrealized profit increases. Long positions on Exchange B: Unrealized losses are increasing. Since the short position of $10,000 on exchange A is greater than the long position of $3,300 on exchange B, when the market falls, A's profit exceeds B's loss, resulting in a net profit. The decline in the spot market is offset by the profit from the short position. (This strategy assumes that the hedged profit is high enough.) V. The core of the strategy: Sacrifice returns to reduce risk. The brilliance of this strategy lies in placing the most dangerous positions (long positions) on exchanges with poor liquidity, while placing the positions that need the most protection (short positions) on relatively safe exchanges. If a market maker wants to liquidate the short positions on exchange A, he must: A large amount of capital was invested to overcome the deep liquidity of Exchange A. The price increase he drives up will also allow long positions on exchange B to profit. The difficulty and cost of sniping have increased exponentially, making it unprofitable for bookmakers to operate. It leverages market structure (liquidity differences) to build defenses and utilizes funding rate differences to generate additional returns (if any). Finally, if there are any seriously nonsensical takeaways: If the expected returns are not good, it's better to just wash up, go to sleep, and do nothing. If you find the mechanism very complicated after reading this article—that's right, then don't get involved blindly. Astute traders may realize that this combination of short and long positions constitutes a "synthetic position," and understanding this principle is more important than making any specific trades. The main purpose of this article is to tell you: Don't act recklessly, don't participate blindly, just take a look. If you really don't know what to do, buy some BTC.With the issuance of new-generation cryptocurrencies such as Monad, MMT, and MegaETH, a large number of retail investors who participate in IPOs are facing a common problem: how to secure their high paper profits? A common hedging strategy involves acquiring the spot currency and then opening an equivalent short position in the futures market to lock in profits. However, this strategy often becomes a "trap" for retail investors with new cryptocurrencies. Due to the poor liquidity of new cryptocurrency contracts and the large amount of unreleased tokens in the market, unscrupulous individuals can use high leverage, high funding rates, and precise price manipulation to force retail investors to liquidate their short positions, reducing their profits to zero. For retail investors who lack bargaining power and OTC channels, this is almost an unsolvable game. Faced with attacks from market makers, retail investors must abandon traditional 100% precise hedging and instead adopt a diversified, low-leverage defensive strategy: (shifting from a mindset of managing returns to a mindset of managing risk). Cross-exchange hedging: Open a short position on a highly liquid exchange (as the primary locking position) and simultaneously open a long position on a less liquid exchange (as a margin call buffer). This "cross-market hedging" significantly increases the cost and difficulty for market manipulators, while also allowing them to profit from arbitrage opportunities arising from differences in funding rates between different exchanges. In the highly volatile environment of new cryptocurrencies, any strategy involving leverage carries risk. The ultimate victory for retail investors lies in employing multiple defensive measures to transform the risk of liquidation from a "certain event" into a "cost event," until they can safely exit the market. I. The Real Dilemma of Retail Investors Participating in IPOs - No returns without hedging, but being targeted by hedging. In actual IPO scenarios, retail investors face two main "timing" dilemmas: Pre-Launch Hedging: Retail investors receive futures tokens or locked-up shares before the market opens, rather than the physical commodity. At this point, contracts (or IOUs) already exist in the market, but the physical commodity is not yet in circulation. Post-Launch Restrictions: Although the spot funds have entered your wallet, they cannot be sold immediately and efficiently due to withdrawal/transfer time restrictions, extremely poor liquidity in the spot market, or exchange system congestion. Here's something I've dug up for you: Back in October 2023, Binance had a similar spot pre-market product for spot hedging, but it was discontinued, possibly due to the need for a launch pool or poor data (the first product listed at the time was Scroll). This product could have effectively solved the pre-market hedging problem; it's a shame it was discontinued. Therefore, this market version will see the emergence of futures hedging strategies—where traders anticipate receiving the physical commodity and open a short position in the futures market at a price higher than expected to lock in profits. Remember: the purpose of hedging is to lock in profits, but the key is to manage risk; when necessary, you should sacrifice some profits to ensure the safety of your position. The key to hedging: only open short positions at high-yield prices. For example, if your ICO price is 0.1, and the current contract market price is 1 (10x), then "taking the risk" of opening a short position is relatively cost-effective. First, it locks in a 9x return, and second, the cost for manipulators to push the price up further is also relatively high. However, in practice, many people blindly open short positions for hedging without considering the opening price (assuming an expected return of 20%, which is really unnecessary). The difficulty of manipulating FDV from 1 billion to 1.5 billion is far greater than that of manipulating FDV from 500 million to 1 billion, even though both involve a 500 million increase in absolute terms. Then the question arises: because of the current poor market liquidity, even opening a short position may still be targeted by attackers. So what should we do? II. Upgraded Hedging Strategy - Chain Hedging Leaving aside the complex calculations of the target's beta and alpha, and using correlations with other major cryptocurrencies for hedging, I propose a relatively easy-to-understand "hedging after hedging" (chain hedging?!) strategy. In short, it involves adding an extra layer of hedging to the existing hedging position. That is, when opening a short position for hedging, also opportunistically open a long position to prevent the primary short position from being liquidated. This sacrifices some profit in exchange for a safe margin. Note: It cannot completely solve the problem of liquidation, but it can reduce the risk of being targeted by market manipulators on specific exchanges. It can also be used for arbitrage using funding rates (provided that: 1. you set stop-loss and take-profit points; 2. the opening price is cost-effective; 3. hedging is a strategy, not a belief, and you don't need to follow it forever). Where should I open a short position? Where should I open a long position? III. Re-hedging strategies based on liquidity differences Core idea: Use liquidity differences to hedge positions. In exchanges with high liquidity and more stable pre-market mechanisms, opening short positions leverages the large market depth, requiring market makers to invest significantly more capital to liquidate short positions. This greatly increases the cost of sniping, serving as a key profit-locking point. Opening a long position on an exchange with poor liquidity and high volatility to hedge a short position on exchange A: If exchange A experiences a sharp price surge, the long position on exchange B will follow suit, offsetting any potential losses in exchange A. Exchanges with poor liquidity are more prone to sharp price surges. If the prices of exchanges A and B move in tandem, the long position on exchange B will quickly generate profits, potentially offsetting any losses in the short position on exchange A. IV. Calculation of Re-hedging Strategy Assume there are 10,000 units of ABC in the spot market. Assume the value of ABC is $1. Empty Position: Exchange A (Stable) $10,000 Long position: Exchange B (poor liquidity) $3,300 (e.g., ⅓, this value can be deduced from the expected return) Spot: 10,000 ABC, valued at $10,000 Scenario A. Price surge (market manipulation by large investors) ABC spot: Value increased. Short position on exchange A: Unrealized losses increase, but due to high liquidity, the risk of liquidation is much higher than in the previous scenario. Long positions on Exchange B: The surge in value offset the unrealized losses on Exchange A, resulting in relatively stable overall positions. (Proper stop-loss and take-profit orders should be set.) Scenario B. Price crash (market selling pressure) ABC spot: Value declined. A short position on exchange: Unrealized profit increases. Long positions on Exchange B: Unrealized losses are increasing. Since the short position of $10,000 on exchange A is greater than the long position of $3,300 on exchange B, when the market falls, A's profit exceeds B's loss, resulting in a net profit. The decline in the spot market is offset by the profit from the short position. (This strategy assumes that the hedged profit is high enough.) V. The core of the strategy: Sacrifice returns to reduce risk. The brilliance of this strategy lies in placing the most dangerous positions (long positions) on exchanges with poor liquidity, while placing the positions that need the most protection (short positions) on relatively safe exchanges. If a market maker wants to liquidate the short positions on exchange A, he must: A large amount of capital was invested to overcome the deep liquidity of Exchange A. The price increase he drives up will also allow long positions on exchange B to profit. The difficulty and cost of sniping have increased exponentially, making it unprofitable for bookmakers to operate. It leverages market structure (liquidity differences) to build defenses and utilizes funding rate differences to generate additional returns (if any). Finally, if there are any seriously nonsensical takeaways: If the expected returns are not good, it's better to just wash up, go to sleep, and do nothing. If you find the mechanism very complicated after reading this article—that's right, then don't get involved blindly. Astute traders may realize that this combination of short and long positions constitutes a "synthetic position," and understanding this principle is more important than making any specific trades. The main purpose of this article is to tell you: Don't act recklessly, don't participate blindly, just take a look. If you really don't know what to do, buy some BTC.