Source: Xueqiu App, Author: Chain Hunter, (https://xueqiu.com/3160465651/167135193)

　　In recent years, capital pool projects born with blockchain and Online casino and How to find it have emerged in large numbers. A few months ago, Chain Hunter analyzed the Forsaga capital pool project based on Ethereum, and this article focuses on another capital pool project with a strong presence in China, the Huahuo Exchange, trying to uncover the story behind the early rise and current collapse of Huahuo.

　　Author | Wang Dashu

　　Do you know that Huahuo is a capital pool?

　　’Everyone knows, those who play know, everyone is just gambling.’ Player Zhang Cheng (pseudonym) told Chain Hunter that Huahuo was just a tool for making money to him, just a game.

　　Zhang Cheng joined the cryptocurrency circle in 2018 and became one of the trading army. Most of his past transactions ended in losses, but the capital pool project Huahuo wearing the cloak of blockchain allowed him to make a big profit. In his eyes, Huahuo is the ‘Bitcoin’ of the capital pool, the synonym of faith.

　　Unfortunately, Huahuo,号称 ‘Bitcoin of the Circle’, collapsed on November 29 this year, with almost all capital pool currencies on the exchange plummeting by over 80%.

　　I. Before and After the Collapse

　　Huahuo is one of the capital pool projects wearing the cloak of blockchain finance. Zhang Cheng still keeps the video of the Huahuo grand meeting a few months ago: the LED screen in the center of the venue played the slogan ‘Huahuo Blooms, Defining the Future’, with nearly 100 people present, all of whom were so-called believers, waving the newly claimed promotion task sheets and standing up to sing in unison with the music, ‘We are a family, a loving family.’

　　These participants come from different places and have different professions. Most of them dress well and look affluent, and here they share a common identity as Huahuo apostles (leaders).

　　Huahuo provided these apostles with benefits such as gold bars, travel, and regular salary payments. Under the dual approach of incentive and education, the number of registered members of Huahuo exceeded 200,000, and the price of the platform currency HDU also rose from about 1 yuan to a high of over 180 yuan, increasing by at least 180 times. These data make the vast majority of exchanges look pale in comparison.

　　In fact, Huahuo Exchange is similar to conventional lottery and How to find it exchanges, where users can trade the Huahuo platform currency HDU as well as other tokens issued by capital pool projects. The official is mainly responsible for promoting the platform currency HDU, with a total issuance of 1 billion HDU, of which the first phase of 10 million mother coins were issued, and the remaining 990 million were issued in five stages.

　　Before the collapse, the circulation of HDU on the market reached about 30 million, with an initial highest price of 26 US dollars per coin, the market value was about 780 million US dollars. HDU holders mainly earn profits through holding currency returns and promotion returns, and the official uses complex algorithms to ensure the continuous operation of the project.

　　The so-called holding currency income is the ‘static holding’ income, the purpose of which is to attract investors by using the appreciation effect brought by long-term investment. The so-called promotion registration income refers to the user purchasing platform currency HDU on the fireworks platform and activating the promotion link relationship to become a promoter. Promoters are also holders, and can enjoy double benefits. The purpose of this mechanism is to attract more people and capital through a fission method.

　　These tactics are no different from the conventional capital circle model, the only difference being the promotional ability of the leaders (super preachers), which will determine how big the capital circle can be. In the eyes of Chen Dafei (pseudonym), who often plays in the capital circle, the biggest advantage of the fireworks compared to other capital circles is that the leader training is done well, and at the same time, the target market is expanded from the southeastern coastal area to the interior, with a larger scope of fission.

　　This strategy of geographic expansion in promotion is very consistent with the view proposed in the early article ‘The疯狂的资本圈’ by the ‘Economic Knowledge’ magazine. The report points out that capital circles are mostly distributed in economically developed provinces, where the atmosphere of science and technology and finance is strong, and people are more likely to accept new things. Moreover, the middle-class population is large, and they have a certain investment capacity.

　　Especially in coastal provinces, there are a large number of small and medium-sized enterprise owners. Although they have the financial strength, their businesses are affected by the overall economic environment, and they encounter bottlenecks in development. The stock market and real estate market are also weak, so they need to find a way out for their capital. Therefore, many capital circles set their headquarters in Beijing and coastal provinces.

　　The fireworks is one of the capital circle projects based in the Shenzhen area.

　　Old player Chen Dafei told Chain Hunter that at the peak of the fireworks, more than 10 types of currencies were listed, most of which were capital circle tokens, which can be understood as a contractual system, with each project responsible by a separate team, and requiring the establishment of an offline office reception location. The party listing the currency needs to buy HDU as the listing fee, but after listing, the market needs the project party to promote it themselves. Among the more than 10 types of currencies, Zhang Ying’s invested NEU rose from 1 yuan per unit to 38 yuan, with a gain of more than 30 times.

　　The other currencies in the fireworks trading area have also achieved a tens-fold increase in value, such a return is rarely seen in the stock market. The fireworks have defined its status in the eyes of investors with such a wealth effect. Participants like Zhang Ying even regard the fireworks as the ‘Bitcoin’ of the capital circle.

　　The reason he has such a high evaluation of the fireworks lies in the fact that the capital circle is very good at using social hotspots, new policies, and economic trends to make a big deal. For example, using the treasure coins and dark coins during the Bitcoin boom, and also using the CAI mining machines with the concept of distributed storage and new infrastructure, as well as the early Internet finance and O2O model’s Rentbao, Jubaofinancial, and so on.

　　However, the prosperity of the ‘Bitcoin’ circle did not continue indefinitely. Since November, all currencies on the fireworks have shown a downward trend, and until November 27th, Zhang Ying could not withdraw the currency, but by then, it was too late to cut losses.

　　「我是第一次玩盘子，最早在花火交易所买了4万元的NEU，后来赚了四十多万，翻了至少十倍，太惊人了。」张铖告诉链捕手，他在资金盘上的部分盈利后来炒币亏掉了些，为了弥补这些亏损，他又投了花火嫁接的另一个交易所银河交易平台的一个币—UBT/RFB/FGO等，不幸的是这次复投赶上崩盘，钱打了水漂。

　　二、雷达币的第二条命

　　此前，张铖一直认为花火这种机制根本不存在崩盘的可能，因为带他入行的人曾说，花火为了持久地激励推广人，推出了动态等级与奖励机制　，以推广者处于一劳永逸状态，缺乏推广动力。

　　「死可以，但我总得知道是怎么死的。」　张铖四处打听崩盘的细节，朋友告诉他，最近警方在严打资金盘乱象，Plustoken落网了，不少资金盘都相继暴雷了。　不久前，奇点的技术人员也被抓了，因为奇点和花火的技术是一家公司做的，都是连带效应。

　　这些对于老玩家陈达飞而言都在预料之中，他告诉链捕手，一旦资金盘项目开始疯狂开大会，代币价格突然拉高或大幅下跌，投资者就需要小心，有可能是崩盘前兆。「花火要么跑路，要么被抓，崩盘是早晚的结局，但外界不知道的是奇点出事儿以后，花火高层都陆续出海了。」

　　陈达飞透露，花火的老板李明星出身于雷达团队，花火交易所的系统与奇点交易所均是出自深圳镭闪科技，镭闪科技成员也是脱胎于早期的雷达团队，目前该公司已经停止运营。

　　不仅如此，不久前就有自媒体指出，鉴于市场趋近于饱和，雷达币创始团队可操作空间变小，为了继续吸金，才推出了如今的花火。在一定程度上，花火是雷达的第二次生命，它成功在于复制了雷达币的模式，同时站在雷达前期获利的成绩上给了花火参与者一个理由，一波嵌套式操作，吸引了不少早前退出雷达币的部分推广团队。另外，值得注意的是雷达币钱包的开屏广告还曾明目张胆地为花火交易所做导流。

　　雷达币对于混迹于盘圈的人来讲并不陌生，它又名Radar，代币为VBC，据百度知道介绍，这是一个成立于2014年的互联网金融工具（同等于互联网银行），可以帮助用户简单、快捷、低成本地进行支付、转账和全球货币的自由兑换。

　　该介绍还指出雷达币（VBC）与比特币一样，是由美国雷达实验室推出的代码开源的真正Online casino and How to find it ，与比特币同属区块链技术，是雷达实验室和「中国央企」合作推出的开元通宝交易平台。

　　In fact, Radar Coin has long been classified as a new type of currency pyramid scheme by the state, and the sale and promotion are all illegal activities. Chen Dafei told Chain Hunter that people familiar with Radar Coin know that this model will not collapse. On the one hand, participants have a strong faith, and on the other hand, it can change its shell freely, like an immortal centipede.
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　　Chain Hunter found that Radar Coin is not the first generation of the pot, it also has a predecessor – Vpal, abbreviated as Vbao, which was exposed by the media for suspected pyramid schemes as early as 2014. The transformation from Vbao to Radar is like the transition from Radar to Fireworks, both are selling pyramid coins in different ways, and the essence is all Ponzi schemes.

　　The essence of the Ponzi scheme is to pay the investment returns of the later round of investors to the earlier round of investors, and so on, making more and more people and funds involved. Theoretically, the Ponzi scheme can roll indefinitely, but in actual operation, the investors and funds are limited. When the funds of the investors and the funds are no longer sustainable, the scam will collapse abruptly.

　　Currently, Fireworks has been in a state of being unable to withdraw for over a month, but there has not been a large-scale rights protection event. Zhang Cheng told Chain Hunter that although at least 80% of investors are in a losing position, the consensus of Fireworks is very strong, and the wealth effect is also very strong, and most investors still have faith in Fireworks. Currently, there are many people in the off-group trading group who are still疯狂 collecting USDT in Fireworks accounts.

　　Why can capital pools become a matter of faith?

　　’Large amounts of Fireworks U are available, negotiate the price to your satisfaction, those in need come.’ This is an advertisement that has frequently appeared in the off-group trading group this week. Interestingly, since the collapse of Fireworks was reported on November 29, the off-group trading group has witnessed a scene from large-scale purchases of Fireworks USDT to large-scale sales of Fireworks USDT. This contrast corresponds to the diminishing expectations of HDU holders for the recovery of Fireworks. ‘They still hope that Fireworks can recover and are bottom fishing, but my brother reminds you not to follow the minefield, the end of the year is strict, and it is better not to participate.’ Zhang Cheng’s friend advised him.

　　After observing the trading group for several days, Chain Hunter found that although there are continuous advertisements for receiving and selling goods in the trading group, they have always been ignored. After contacting a buyer who receives Fireworks U, the other party said that he is just an intermediary, and the real buyer is those elderly people and women who have faith in the Radar Coin series like Fireworks.

　　This intermediary also revealed that the messages in the trading group are half true and half false, most people are just agents, and almost no one is really receiving goods. ‘To tell you the truth, I only make a little pocket money, just those old men and women are betting. They have made a lot of money playing Radar Coin before, they understand the Fireworks model, and they believe in this pot, not caring to put some money out to collect low-priced chips.’ The intermediary said that the current price of Fireworks U is 1.35 yuan, which has dropped 90% from the price before the collapse, and it will only continue to drop in the future. Those so-called believers will definitely suffer heavy losses in the end.

　　The commonality of the believers mentioned by the intermediary is — greed.

　　The fundamental reason why these elderly people and housewives believe in Radar coin is that they have obtained high returns from Radar coin in the past. Radar coin was launched in 2015, and its price reached a high of 580 yuan per coin, with a gain more than ten times that of Huahuo. Even without earning promotion income, just the static income from holding and generating coins is higher than the interest rate given by the bank.

　　’Playing capital pools is like trading coins; when trading coins, you also need to investigate whether the team is capable, how strong the market promotion power is, whether the consensus is sufficient, and whether it can attract capital. All these are determined before betting on when the coin will explode. Capital pools are the same; as long as the consensus is strong enough, anything can be achieved. For example, Huahuo’s HDU can be used for consumption in some merchants, and there are several coins in the coin circle that can do this?’ Zhang Qing said that most of the people in the coin circle are netizens, very illusionary, but in the capital pool circle, offline conferences are often held, which not only strengthens faith but also allows people to get to know more.

　　There are not a few investors like Zhang Qing, and the ‘Economic Knowledge’ magazine previously mentioned typical cases of victims of capital pools.

　　In 2015, Mai Shui invested in a project named Bai Chuan coin under the encouragement of a friend, and after a month of trial investment, she made a small profit. Mai Shui said that this model subverted her previous understanding of investment and wealth management. After tasting the sweetness, Mai Shui began to heavily invest in Bai Chuan coin. However, within two months of investment, news broke out within the team that Bai Chuan coin company was investigated and senior management was detained.

　　Afterwards, the investors of Bai Chuan coin quickly divided into two camps: the steadfast camp and the rights protection camp. The steadfast camp believes that this is a conspiracy by competitors, and Bai Chuan coin will continue to develop after overcoming the difficult period; the rights protection camp, however, believes that Bai Chuan coin is a scam and pyramid scheme, calling for everyone to unite to protect their rights.

　　Mai Shui chose to stick to the camp, imagining that Bai Chuan coin could continue to develop, while she hoped to recover all her principal. However, this fantasy was shattered after the court judgment announced that the Bai Chuan coin team was sentenced to 13 years and 6 months in prison and fined 20 million yuan.

　　Zhang Qing’s thoughts are similar to Mai Shui’s; both of them are well aware that the capital pool is a scam, yet they still harbor speculative and侥幸 heartsonline casino entry method and The latest entrance. Whether it’s Huahuo, Radar, or the participants in the article, they are all people driven by greed and desire for profit, which is an eternal weakness of human nature.

　　Returning to the off-exchange trading group, the advertisements for Huahuo U are still bombarding the screen. ‘Are you going to sell today? Think it over well, as delaying it any further may really mean no price left.’ After asking several questions to the intermediary, the Chain Hunter journalist still received frequent reminders from the intermediary to complete transactions over the next few days.

　　However, Zhang Qing and many players around him have already withdrawn from the off-exchange trading group and downloaded a new exchange APP, ‘which is said to be the new shell of Huahuo’.

　　Reference materials: ‘Crazy Capital Pool’ — Economic Knowledge Journal, Issue 9, 2016

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