Airdrop culture could pose an integral threat to the DeFi industry

EtherWrapped, a project designed to provide an annual summary of non-fungible token (NFT) user activity, launched just over eight hours ago with palpable fanfare within the crypto community.

The website detailed a plan to release YEAR tokens based on quantitative engagement statistics in users’ MetaMask wallet, or in simpler terms, their number of trades, volume traded, and gasoline costs, among others. data.

After checking on EtherScan, a number of well-known developers and engineering experts in the space evaluated the coding of the smart contract. Meows.eth noted that these parts saw a “presence of a function called _burnMechanism”, but concluded that this was simply a harmless error on the part of the seemingly amateurish creator.

However, unbeknownst to everyone, the contract creator maliciously planted this loophole in order to administer the “revokeOwnership” function soon after, taking ownership and then orchestrating a honeypot scenario in which users could only buy, not sell, the asset.

As a result, those who had connected their wallets and received the parachuted token saw their assets skyrocket and as such fueled by the alluring fear of running out (FOMO) propensity, were urged to buy more on the Uniswap V2 aftermarket.

It must be said that the act of interacting with the contract or claiming the token did not result in any losses, but rather the resulting investments in the YEAR asset on decentralized exchanges.

According to EtherScan, the malicious entity was able to siphon 59.7 Ether (ETH) from the scam, which equates to $ 225,000 at current prices. On top of that, the Uniswap V2 contract saw a daily trading volume of $ 6.8 million.

While not a significant amount in the larger context of DeFi’s $ 139 billion total locked-in value (TVL), the incident underscores the critical importance of reviewing and verifying the authenticity and contractual diligence of new smart contracts before connecting Web 3.0 wallets.

Related: Telling The Biggest DeFi Hacking Incidents Of 2021

Decentralization, often in the form of financial distribution, is one of the fundamental tenets of Web 3.0. While the previous iteration of the internet reduced the power of the centralized giants of Silicon Valley, Web 3.0 promises to bestow power on the people.

Over the past year, a host of decentralized fundraising projects, including UniSwap, dXdY, ParaSwap and others, have successfully deployed native assets – many of which were valued at tens of thousands of dollars – to their community members in the goal of advancing the development of their ecosystem.

Last month, ENS became the latest project to showcase the true potential of governance models, and more recently, OpenDAO’s SOS token and GasDAO’s GAS token were awarded to those who registered trading activity on the main NFT OpenSea marketplace, and to those who spent at least $ 1,559 of ETH on transaction fees.

Now, while these projects are legitimate innovations with openly documented roadmap goals, the increasing prevalence of these airdrops – especially their exaggerated speculation and their initial wacky expectations for projects that are just emerging from the crypto womb – could become the catalyst for a trend of carpet draws, Ponzi schemes and pump-and-dump projects that aim for short-term monetary gains, similar to the era of initial coin offering (ICO) tokens from 2017.

While a handful of assets launched during the ICO craze have been successful, many have seen catastrophic drops in financial grace, tarnishing the integrity and trust of the entire space. cryptocurrencies, while also fueling the often dismissive dominant narrative.

Looking ahead, rumors circulating of potential MetaMask and OpenSea tokens are cultivating optimism for building a truly decentralized and community-centric Web 3.0 industry. Whether this technological utopia becomes reality amid the motivations of venture capitalists and tech giants is another matter of debate.

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of TBEN.



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