17 Jul, 20232 mins read
Why Delist From a Centralised Exchange? The Crypto Community's Dilemma
As a CEO of a nascent cryptocurrency venture, managing a community of token holders can be both an exciting and challenging task. This community, thriving across various platforms like Telegram and Discord, acts as the lifeblood of a crypto project. However, the speculative nature of cryptocurrencies often leads to extreme price volatility, especially on smaller exchanges susceptible to the impact of large transactions or social media rumours.
You would think that the price of a relatively new token listed on minor and decentralised exchanges would be influenced mainly by changing demand levels and new project-specific fundamentals. However, something you might not expect is the long-term erosion of token value caused by 'Extractable Value Bots' (MEV bots). MEV bots are automated traders that exploit price differences across exchanges, employing strategies such as arbitrage or front-running. They often damage the nominal value of a cryptocurrency over time. Although not commonly discussed, the most effective way to stop MEV bots is simply to request the exchange to disable the APIs they exploit.
This scenario played out for the Gamefi start-up, Metacade. Their token was targeted by an MEV bot that leveraged price discrepancies between the Centralised Exchange (CEX) and Uniswap, eroding the token's value. Despite the CEX swiftly increasing the decimals and disabling the harmful APIs, the token holder community on Discord and Telegram began to voice their concerns to Metacade for the drop in the token's value. In response to this, Russell Bennett, Founder and CEO of Metacade along with the senior team committed to a deep dive to analyse the data and represent the facts. The facts were inconclusive but this was a true example of when sentiment and feelings from valued community members trumps data points. We initiated a vote among the token holders as to whether they should delist from the CEX. The majority of the community voted for delisting to quell speculation and improve sentiment towards the project.
This episode underscores the importance of managing community expectations in the volatile world of cryptocurrency, and the need for strong leadership. Listening to the community and allowing them to voice their concerns is crucial, especially if the business prides itself on being community-driven. For both project managers and token holder communities, it's essential to be aware of APIs and MEV bots' exploitative activities. For project managers, stopping MEV bot activity can often be as simple as asking the exchange to disable affected APIs. For token holder communities, being vigilant about trading activity and wallet addresses can help identify potential auto trading.
Despite the technical measures a CEO may take to halt MEV bot activity, a community-driven project must always listen to its community's concerns and balance that with fact, data and the business goal. The Metacade case is a testament to the ethos of decentralisation, showcasing a crypto community's fervour for defending their investment from damaging exploitation by automated agents. For more technical insights into Metacade's encounter with MEV bot attacks, you can follow the link below for a comprehensive report by Metacade's Head Moderator CryptoChallenger which can be found in our official discord.
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