Token Airdrop Gone Wrong
Fees.wft is a platform which enables an individual to check how much they have spent on gas fees on the Ethereum blockchain. The service also shows the number of failed transactions, and the cost of such transactions.
Meanwhile, on the evening of January 13, 2021, developers behind the fees.wtf launched the WTF token to be airdropped on Friday, (January 14, 2022). Anyone who has ever used Ethereum would be eligible for the token airdrop. Also, users claim a non–fungible token (NFT), which gives access to the pro version of fees.wtf
Interestingly, users would have to pay a fee of 0.01 ETH ($33.26) to claim the token and the nft. The claim fee goes to the WTF team, but a part of the fee could go to individuals who used the referral method.
Also, the token was distributed to users based on how much eth the users spent on gas fee and the number of failed transactions incurred. According to data Etherscan, the team behind the WTF token has currently earnered 188.7 ETH ($628,835) from the “unlock fee”.
The token was listed on the major decentralized exchange (dex) uniswap, but the developers provided low liquidity on the exchange, putting 2211.46 WTF and 0.000001 ETH in the trading pool, effectively creating an imbalance. Meanwhile, the insufficient liquidity was the cause of the problem that followed thereafter.
Battle of the Bots
Few hours after the airdrop went live on January 14 saw a trading competition between bots. One of the bots purchased 2211.45 WTF from the pool with 2 ETH, leaving just 0.01 WTF.
This action caused the price of WTF tokens to skyrocket, with other bots scrambling to get fragments of the remaining WTF in the pool, and paying with more ETH.
According to a tweet thread by a user known as meows.eth, another bot first bought a minute fraction of WTF for 10 ETH. The same operator set the gas fee to 3,000 gwei, to sell the same token for over 58 ETH, making a near six-fold profit.
Setting such a high gas fee caused the transaction to be immediate. Meanwhile, the action of the operator caused the price of the WTF token to plummeted
Mistakes Made, Lesson Learned
However, the team faced heavy criticisms for the low liquidity provided in the pool, and the inability to sell the tokens that have no almost lost its value, on Uniswap v3. An Etherscan transaction showed that one individual bought 0.00004 WTF for 42 ETH, which is almost worthless following the the price dump.
The fees.wts later released a post mortem detailing the incident. While the team later injected 20 ETH to the liquidity pool, they tried to explain why there was no sufficient liquidity initially. According to the report:
“You see, if we put a supply of ETH into liquidity straight away then it wouldn’t have been bots draining other bots, it would have been all the bots draining us. The outcome would have been much the same, only we’d be without any liquidity to add at a later stage.”
The post-mortem also mentioned the 4% cut gotten from every transfer, stating that the funds were being distributed to WTF holders, the project’s treasury, and also for staking pools.
While the team admitted that the token airdrop launch was chaotic, they said that they have learned from the mistakes and will build from them. Meanwhile, the WTF team implied that the airdrop incident was no rug pull.