The Three Plate Theory - The Ultimate Guide to Ponzi Scheme Construction

Author: Crypto Wei Tuo Source: X, @thecryptoskanda 

Foreword

Whether you are willing to admit it or not, a large part of the progress of human civilization comes from unfounded but optimistic assumptions, and currency is the best example of this assumption-a kind of Optimistic assumptions about the ability of other entities to "equivalent returns".

Our ancestors unquestioningly accepted money as a substitute for food in exchange for the value they created. The fact is, however, that money is simply an accounting symbol that records social relationships between creditors and debtors and never needs to have any intrinsic value.

But now, we have given this phenomenon a more appropriate name - "Ponzi". Next, I will explain my theory on how to identify, understand, design, and ultimately control Ponzi mechanisms in cryptocurrency and other fields to maximize profits-this is what I call the "Three Traps Theory" (The Three Ponzi Problem)

What is Ponzi?

In short, Ponzi is an economic system in which the mismatch between capital demand and expected returns creates a "gap" that The "gap" can only be filled through further mismatches. (This definition is my own original creation, and I hereby declare it.)

Is every Ponzi system an “artificially” designed system? Yes.  

But it may not be a scam.  

This depends on whether this "gap" is considered reasonable and acceptable by the audience. Historically, these "gaps" have often been beautified and packaged into other terms, such as "sovereign credit", "legitimacy" or "market consensus". Ponzi is not an absolute concept. Its true nature often needs to be examined from a macro perspective, as many Ponzi do not exhibit typical characteristics at the micro level.

In fact, Ponzi’s daily They are more common in life than you think, and they often seem reasonable. Take the residential real estate market, which has existed since 3000 BC and is considered a “productive” store of value. However, in fact, if it were not for the rapid and continuously growing inflation caused by modern fiat money printing, this value logic would simply not be sustainable.

What is the three-pan theory?

Every Ponzi must be based on one or more of the following three basic forms: dividend plate (Mining), mutual aid plate (Pooling) and Splitting

It may sound absurd, but the three-pan theory can serve as a guiding framework for designing and operating almost any Ponzi system—whether at a macro or micro level.

Three plates - dividend plate

The dividend plate is a system where users There are upfront sunk costs that need to be borne, with the expectation of gradually receiving the promised fixed returns over a period of time.

Types of dividend plates

A. Fund-type sunk cost users need to invest funds (also Including the opportunity cost of liquidity) before you can start to reap benefits. Examples include the mining ecosystem of Bitcoin/KASPA/FIL (excluding Bitcoin itself), PoS staking/re-staking on L1, DePIN, and dividend disks like Plustoken.

B. Time/Energy Sunk Cost Users invest a lot of time or energy in the hope of obtaining benefits. Examples include Pi Network, Galxe badge events, pointless Discord role battles, and Telegram mini-programs like DOGS.

Evaluate the bonus plate Key Indicators

• Fixed sunk costs: one-time non-recoverable investments (such as Bitcoin mining machines ).

• Incremental sunk costs: periodic non-recoverable costs (such as electricity and maintenance costs) incurred to obtain each unit of incremental revenue ).

• Withdrawable returns: earnings that can be freely withdrawn and realized.

• Reinvestment cycle: the period in which reinvestment is required after the sunk costs expire.

• External Liquidity: The available liquidity for this dividend token on external trading venues.

Collapse Model

Conditions for dividend plate collapse:

Actual incremental sunk cost + external liquidity< Extractable returns

At this time, the system creator should make profits by stopping dividends and "running away".

How to delay the collapse (taking BTC mining as an example)

• Activate the flywheel effect: high currency prices → higher mining machine demand → higher mining machine prices → manufacturers get more cash → manufacturers further push High coin prices.

• Increase the total sunk cost: Continue to increase the minimum total sunk cost to obtain additional tokens, driving a higher "shutdown price".

• Pricing sunk costs in fiat currency: Avoid using token pricing as this will give early participants an unfair advantage and weaken adoption The purpose of raising sunk costs to drive higher shutdown prices.

• Control liquidity in the early stages: Minimize external liquidity in the early stages to prevent premature selling and maintain a stake in the token Some control.

Case Study: Bitcoin Mining Ecosystem

Let’s review the Bitcoin mining ecosystem – one of the most classic and well-run crypto Ponzi systems – as well as Bitcoin ($BTC) itself. Many historical mysteries can be explained.

Why BTC in 2013 Yearly increase ($10 → $1000)?

2013 was the year that ASIC miners were introduced, which gave miner manufacturers a dominant position in revenue and sales, making them the first choice for Bitcoin. The first batch of "market makers". At the same time, there were no highly efficient and liquid trading venues and liquidity models, and low external liquidity also made price manipulation easier, thus initiating the flywheel effect. How did Bitcoin rise in a miner-led cycle before 2021?

• Miner costs (power and facilities) are denominated in fiat currency

• The incremental cost is much higher than that of electricity, especially in China, where the CCP’s policy crackdown since 2019 has led to many miners potentially suffering complete losses in pursuit of lower electricity prices.

• Due to these policies, the total sunk costs and "shutdown price" are much higher than what appears on the books, which is objectively unintentional. Pushed up the price of Bitcoin.

Three disks - mutual aid disk

Mutual assistance disk is A system where users provide liquidity in exchange for the promise of a fixed return per unit contributed. Unlike the bonus plate, the mutual aid plate does not need to lock assets, but relies on high transaction volume to operate, just like a casino does not directly rely on individual wins and losses to make profits, but takes a certain percentage from the total transaction volume.

Types of mutual aid disks

• Pure MLM money-sharing users by attracting More participants to receive dividends, relying solely on capital inflows (eg: Forsage.io, 1040 Sunshine Project).

• Quasi-option funds circulate among participants, and new funds are used to pay old participant returns (for example, A transfers money Give → B transfer → C transfer → A), usually including liquidation or restart clauses in case the funding target is not met (for example: FOMO3D, 3M, the meme coin market in general).

• Liquidity mining users earn income by providing liquidity, usually sacrificing exit opportunities in exchange for higher returns.

DeFi users are no strangers to mutual aid disks, because most DeFi tools are essentially "macro L1 mutual aid disks" In some cases, such as lending and borrowing protocols, the speculative token dynamics in these systems are a core source of mismatch.

Crash model

Conditions for the collapse of the mutual aid market: 

Systemic Debt> Liquidable Assets + External Liquidity Ponzi designers usually make profits through handling fees or front-running profits.

How to delay the crash:

• Clearly set the maximum liquidation threshold Profit caps or enforcement of stop-loss/restart mechanisms

• A ban on arbitrage eliminates arbitrage that could undermine systemic debt rules and drain liquidity Opportunity

• Preventing runs allows for an orderly exit and avoids damaging effects on the remaining assets in the pool

Case study: AMMs and the evolution of mutual aid disks

AMMs (automated market makers) A major breakthrough has been achieved in the mutual aid disk infrastructure, comparable to the emergence of commercial banks.

Why did LP liquidity mining collapse after DeFi Summer?

Why new income mutual aid disks tend to be Uni V3 type models, such as @MeteoraAG ’s LP Army?

Uni V2 Liquidity Mining:

In Uni V2, users can mine indefinitely Provide liquidity and be rewarded with high annualized yield (APY) on the same token.

Why it crashed:

• No clearing Threshold proceeds are distributed to the entire liquidity pool, even if only a small portion is actually used. But as long as the liquidity provided is in the pool, you can obtain unlimited local currency output

• Arbitrage vulnerability "poaching" The "raise" strategy allows early participants to quickly recover their capital, which is then equivalent to risk-free arbitrage and exhausts the liquidity of the remaining LPs by selling their local currencies

• No run prevention measures and no withdrawal restrictions lead to panic selling when APY drops, eventually bringing down the entire pool

Uni V3 How to Fix Issues:

• Liquidation Threshold Only liquidity within a specific price range is eligible for yield rewards.

• Run prevention Liquidity exit in a certain price range will not affect rewards or liquidity in other ranges.

• Fix arbitrage loopholes. Most projects have removed instant token rewards and replaced them with points mechanisms (Post-DeFi Summer). Although this This mechanism has caused new problems in the design of split disks.

Three plates - split plate

Split The market is a Ponzi system in which the total funds remain constant at a specific point in time, but the number of equity or assets corresponding to each unit of funds is multiplied, and at the same time, the price of the newly generated equity or assets is reduced proportionally to attract Subsequent capital inflows. This is very similar to a stock split in traditional finance.

In my opinion, split trading is the most complex and difficult to control Ponzi system. It usually does not exist on its own, but rather serves as a "de-foaming" mechanism nested within one or two other Ponzi forms.

Crypto's split disk

In Crypto, All L1/L2 are essentially dividend disks, and as long as they need to build an "ecosystem", they are also split disks. For example:

• BTC inscription/rune/L2 to BTC

• PumpdotFun to Solana

• aixbt/Luna/ Game to Virtual

The ultimate goal of splitting is to convert a certain token into the pricing unit of as many assets as possible , just like the U.S. dollar is to U.S. stocks.

Why?

Because both the U.S. dollar and L1 tokens are essentially created out of thin air. Alchemy, "fake money for real money" is achieved by providing a higher nominal ROI.

Crash model

Conditions for split plate collapse:

• ROI below market benchmark Beta Competing split systems with higher ROI and similar risks will attract user churn.

• The split rate is too high or too low. A high split rate will dilute liquidity, while a low split rate cannot maintain ROI< /p>

• Capital loss new capital inflows dry up and existing holders quickly exit using them as exit liquidity.

The main profit point of Ponzi designers lies in front-running behavior.

Case Study: Ethereum, ICO and Solana

Ethereum is a classic dividend disk , but it became the most important splitting mechanism in history through the ICO era. Why does Ethereum need an ICO?

• Mining is inflation: the rising "shutdown price" is too high, which will naturally prevent new Participants enter.

• Split mechanism attracts funds: ICO attracts participants to hold $ETH, and these participants need to purchase ICO tokens to $ETH is converted into a unit of account and defoamed.

Why do ICOs succeed/fail?

• High ROI: The return rate of ICO far exceeds that of holding$BTC or other obsolete tokens. Many ICOs have close to 100% circulating supply and low FDV, creating explosive ROI in a low-liquidity environment.

• High split rate: Too many ICOs too quickly dilute the overall liquidity.

• Capital loss: At that time, most ICO tokens lacked liquidity and participants were unable to recover funds, and $ETH Not so. Developers were selling ETH faster than funds were flowing in, turning ICO participants into pushing out liquidity. Ultimately leading to ROI collapse.

Thus, $ETH experienced a "Davis Double Click" at that time.

Ethereum’s dilemma in 2024

• < p style="text-align: left;">Capital loss: locking funds through LSD, re-pledge (Restaking) and PointFi, reducing the effective circulation volume (the trading volume that can participate in speculation).

• The split rate is too slow: new projects are mainly led by the inner circle to "align and orthodoxy with the Ethereum Foundation and Vitalik In the name of sex”, to V entrepreneurship

• Low ROI: Compared with Solana, it has restored the ICO model of the ETH era (such as Pump.fun), Ethereum’s ROI is less competitive.

Why is a 2024 spin-off like Solana successful?

Balance splitting rate and dilution through Pump

Meme Coin is a split asset of Solana, with $SOL as the unit of account, and Accelerated through Pump mechanism. Pump itself operates as a mutual fund, with liquidity turnover so fast that it almost simulates a quasi-options cycle. This effectively alleviates the liquidity dilution problem caused by high split rates, allowing funds to remain on the market to continue to participate in speculation, while maintaining low-threshold entry opportunities for new users.

Improve ROI through marketing machine

Solana is the only L1 with its own "marketing machine", from Colosseum /Superteam community to large network of vloggers and KOLs (e.g. Jakey, Nick O'Neil, Banger, Threadguy, etc.). Combining core influencers such as Toly, Mert, and Raj, Solana deliberately brings liquidity to emerging low-liquidity meme coins and projects, delivering super-exponential ROI (exceeding market benchmarks) and driving $SOL - Meme Coin Flywheel Effect. Similar strategies are also imitated by Sui and Virtual (such as Luna and aiXBT).

Three-pan design mentality combined with three-pan design

Each Ponzi operates under the assumption of a closed system, subject to the inherent limitations of its collapse model. These limitations can be alleviated by integrating the features of Mining, Pooling and Splitting, each form has its own unique role:

• Dividend plate: Lock assets to maximize assets under management (AUM).

• Mutual aid market: extract money through high trading volume.

• Split plate: Use the price fluctuations of sub-plates to remove bubbles from the main plate.

When designing a Ponzi system, start with the following basic questions:

• How does the bookmaker make money in this design?

• How can Zhuang accept its collapse?

Then you will know which disk type to choose

Choose your cabal, know your target audience

Ponzi is a zero-sum game, where profits and losses come from the same source. The key question is: who are your allies and who are your “prey”? First, understand the scope of your cabal's capabilities:

• a. People who directly influence and persuade

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b. People who can be reached but not necessarily convinced

• c. Completely unreachable people

An effective cabal should:

• Maximize the coverage of a + b

• Highly aligned in terms of interests

• Assign clear roles to each member

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The number of members should not exceed 7 to ensure smooth collaboration

This also explains why some “particularly popular” advisors appear on multiple teams, or why certain VCs are replaced by exchange VCs in early funding rounds.

Secondly, understand your audience and their characteristics. Key indicators include:

• Age: Is it 80s, 90s or 00s? ? How liberal was their upbringing?

• Information source: Are you using Twitter, Telegram, TikTok, or WeChat?

• Financial concepts: What is their attitude towards freelancing, financial freedom and time autonomy?

• Knowledge level: Can they grasp the basics of cryptocurrency?

• Risk preference: Do they prefer passive returns (interest) or active returns (trading)?

Typical portrait of "destined to enter the currency circle and become a family":

• At least after 80/90/00

• Use Twitter, TikTok or Telegram

• Tend to freelance work and reject institutionalization

• Prefer active financial activities and value transactions

Among TikTok users Slightly different - they tend to be more inclined to the PVP model. After all, most of them grew up in the era of stock games that lacked macro growth. These are "new humans" (the kind mentioned by Gundam), and they have accepted a hyper-financial world view. . Sell ​​them the narrative of “fair start,” “anti-establishment,” and “anti-political correctness.”

If the above portrait does not fit your audience:

Borrow or falsify their blind faith in authority endorsement. They are more like docile people under authoritarian rules.

The first principle of three-disk design: never violate human nature

History has proven one point : The developer's beliefs don't matter. As with any cryptocurrency project (not just Ponzi), sustainability usually gives way to popularity (you need to survive first), and popularity relies on being consistent with human nature:

• Nothing lasts forever: don’t expect your project to be the exception.

• Perception trumps reality: at its core, Ponzi is the art of manipulating people's minds. Your project doesn’t need to be what you claim it is, it just needs to match your audience’s perception and convince them that it is.

• Let them gamble: Don’t make decisions for your users and sacrifice gaming opportunities for safety. Your audience likes to take risks, otherwise they won’t Will get involved in the encryption field.

• Say "thank you for participating" calmly: face it rationally. Your priority is profit, not emotional investment in the project. When the trend stops, retreat decisively.

Timing

"When the time comes, heaven and earth all work together , the hero is not free." How successful you can be depends on resources, but whether you can succeed depends entirely on timing. Many Ponzi's take off simply by launching at the right time, while others with comprehensive products struggle to break even

How to evaluate timing?

For crypto users, the primary consideration is the risk-benefit ratio—the balance between perceived risk and expected return

Two expectations to consider:

• Liquidity expectations relative to the market Users are affected by the average daily transaction volume they are accustomed to. For example, in a bull market, $SOL may have a daily trading volume of $1 billion, while in a bear market, most coins only have a daily trading volume of $500,000 on Binance. - Why it matters: Liquidity determines how easy it is for users to convert book value into cash, which is a key factor in decision-making. - How to measure: Analyzing 30 days of DEX and CEX trading volumes can provide clear indicators.

• Expected Market Beta ROI under Similar Risk Conditions In a bull market, even 100% APY may struggle to attract $1 million TVL, and in a bear market, everyone may be more inclined to chase the safer 10% mining income. - Why it matters: Users will compare returns based on market conditions and adjust risk preferences accordingly

Specific to market types:

• Liquidity: Mining type (early stage)< Split type < Capital pool type< Mining type (mature period)

• Expected rate of return: Mining type (mature period)< ; Mining type (early stage) < Fund pool type ≤ split type

Quick test:

• Liquidity test: If Ponzi’s liquidity is lower than current market expectations, then Not a good time to launch.

• Return test: If Ponzi's returns are lower than market beta returns, it's not a good time to launch either.

Don't be overconfident, the opportunity is fleeting

Opportunities are like water, constantly changing. If your resources are insufficient to change the tide, focus on speed: fast delivery and speed to market. In this case, leveraging an industrial, replicable, and cost-effective product framework may become key.

Can Ponzi finally be rationalized?

Honey, isn't that what we've been doing for thousands of years - rationalizing predatory systems into social normalcy. This process is so efficient that people no longer pursue predictable gains, but instead pursue "give a chance" and blame losses on their own "technical problems." So what is the outcome of the three Ponzi types?

• Mining type: evolved into a similar form of mutual funds (by locking TVL dividends, such as mining pools, JITO models)

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• Fund pool type: evolved into casino (such as PumpdotFun, Crash Games, JLP/GLP pool)

• < p style="text-align: left;">Split type: Evolving into alternative asset markets (such as Bubble Mart, BTC Inscription, NFT, ICO)

Before the end

Thank you for taking the time to read this long article. I tried to be concise but comprehensive. The three-pan theory was first released last year as part of my banker teaching project Open Rug (Open Source Sickle) in the Chinese currency circle. This series of articles is derived from the experience I have accumulated over the past eight years. Regardless of victory or failure, the peak capital volume of Ponzi projects exceeded $1 billion, and tens of millions were withdrawn.

Today, the three-pan theory has become one of the most cited analysis frameworks among degens and developers in the Asian circle. From a relatively mild perspective, the three-disk theory is a set of extremely lethal growth hacking methodologies.

The real purpose of the three-pan theory is mainly to disenchant and deconstruct the overly complex and hypocritical narratives woven by the Western currency circle and refocus the attention of developers On to what really matters: building a hyper-financial world where everything can be priced, traded, and frictionless through ubiquitous Ponzi economics.

Of course, the main thing is to make big money.

Hope this helps, in any way