Exchange contests: Which game are you playing?
Binance and Kucoin are two quite reputable exchanges that regularly run trading contests and other sorts of competitions. Most of the time, unless you have some serious amount of Bitcoin to splash around on very very volatile tokens, it is highly unlikely that you will make the leaderboards where the big prizes are. However, if you are savvy, it can be an opportunity in two ways.
Sometimes, there aren't that many participants, and you can snipe in with relatively a relatively low buy in... or there are participation prizes, where you can just meet the minimum trading amount whilst minimising any losses to pick up some easy (but small) amounts of the competition token. Of course, you have to double check that the contest rules don't require you to hold the tokens for an extended period of time, as that really exposes you to volatility, and you want to exit the contest with a similar BTC or USDT position that you started with! I learnt a lesson a month ago with an AVA contest on Binance where I forgot to set a stop-loss order... oh well!
However, apart from the "real" contest, there is another game that you can play. During these contests, the token being featured tends (not always...) to rise quite a bit against BTC and USDT. More reliably against the USDT as BTC is also volatile. This means, if you snap up the tokens before or at the start of the token, then you could make a trading profit as the latecomers to the contest start buying in... and when the contest starts hotting up for the prize positions, there tends to be another spike. However... beware the dumps that come as people also quit the contest... or are also cashing out on profits whilst playing this "secondary" game!
Recently, Kucoin had a contest for a NFT/DeFi token called DEGO on their Pool-X platform. It's probably a bit of a sign of the times we are in at the moment, when you cross the two hottest buzzwords together and form a liquidity miner that is actually also a NFT that looks like a mining cart.
When I had a peek in at the contest, I was surprised how low the buy-in was for the top 250 prizes. The contest had been running for a couple of days and the snapshot time was only a day or two out. I had initially written off taking part in this contest as I thought that the prize places would be fast snapped up and much more expensive than I was willing to risk. Keep in mind, that seconds after the snapshot, it wouldn't be unreasonable to expect a huge dump in the DEGO price!
However, at that moment, I had enough liquid BTC and USDT to place quite highly on the prize pool. I also had some reserves that I could use to bolster my ranking if it came down to it. So, as always, I set clear targets on what I was willing to risk and when I should just pull out of contention... cut losses so to speak and not succumb to FOMO and sunken cost.
So, I stayed nicely within the guaranteed prize placings until two hours before the snapshot time... and at this time, I started seeing the DEGO prize rising quite rapidly. I did a quick calculation, and found that even with my reserves, I wasn't prepared to risk the dump as I wanted to not make a loss on taking part in the contest. Plus, if I exited straight away, I could make a really nice profit on the DEGO that I had bought before the last minute spikes in price as others started buying into the contest..... even selling as market-taker orders and just eating the higher trading fee! Well, to be honest, I just wanted out and to leave with more BTC and USDT than I started with!
Still, I held onto a couple of DEGO tokens as it seemed that everyone from rank 250 onwards were entered into a lottery for 50 prizes anyway. There seemed to be a maximum of around 700 other accounts in the lottery (the top 250 were excluded) and there didn't seem to be a minimum DEGO holding to take part, so I figured... why not? 50 from 750 is okay odds for a lottery, and if the lottery ticket is only a couple of dollars which I could dump later... well, no harm in playing!
I had forgotten about the contest immediately afterwards as I got distracted by parent stuff and real life. But I got a message saying that the NFTs were distributed and that I should check in to see if I had won. Well, like most lotteries, you don't expect to win...
... but it turns out that I had won a little Grade 1 mining cart that I set to work immediately mining KCS. Not bad for a handful of cents for the lottery ticket (I dumped the leftover DEGO) and for being "forced" to take a profit on DEGO when I decided to quit the race for the top 250!
Wish it could always go like this!
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