Things traders need to watch out for so bots don’t steal Ethereum when participating in the airdrop
Things traders need to watch out for so bots don’t steal Ethereum when participating in the airdrop.
Trading bots have been struggling to push WTF token trades following Fees.wtf’s early airdrop on Friday. Some bots have made thousands of USD in profits and many traders have fallen into the trap.
Fees.wtf Airdrop attack bot
The Fees.wtf airdrop helped many people see the wild world of bots on Ethereum.
fee.wtf, a website that allows Ethereum users to check how much gas they’ve spent on transactions, began issuing tokens early Friday. Ethereum users were assigned WTF tokens based on how much gas they spent on transactions and how many failed transactions they suffered.
The airdrop follows a series of similar Ethereum distributions over the past few weeks. On Christmas Eve, OpenDAO performed a drop of its SOS tokens to OpenSea NFT traders. After that, Gas DAO and LooksRare quickly launched their tokens. While the developers of the previous airdrop ensured their pools had sufficient liquidity to facilitate transactions, it appears that Fees.wtf did not.
Follow Data by Etherscan, the initial total liquidity provided to the WTF/WETH pool on Uniswap was only 2,211 WTF and 0.000001 WETH. Once the pool was set up, trading bots stepped in, draining the liquidity and sending the WTF price skyrocketing. Subsequent bots attempted to drain liquidity, which eventually resulted in the trader paying large amounts of Ethereum, but only receiving less and less WTF in return.
Chart showing the highest price a user paid for WTF | paid Source: Substream
While some of these trades were sandwich attacks (a form of front run) by advanced MEV bots, some also appear to have been caused by traders trapped by excessive slippage and excessive bots that were slow at extracting liquidity. Users unfamiliar with Uniswap’s advanced features submitted trades with 95-99% slippage, meaning they received only a fraction of what they expected due to the liquidity of the trading pool.
A bot extracted 58 ETH from a liquidity pool by buying all the remaining WTFs of the pool in the first transaction and then reselling them for almost 6x the price bought. The bot was able to do this by paying around $2,854 in gas fees to ensure its transactions were processed before anyone else.
Another bot spent 850 ETH to buy 97 WTF with token price locked above $28,600. However, like the bot before it, this transaction was part of a complex MEV strategy that ultimately gave the bot a net profit of 0.08 ETH after deducting gas fees.
While the trading bots were fighting each other in the low-liquid WTF/WETH pool, it is highly likely that other individual traders were caught up in the chaos. On-chain data shows that many user transactions try to pay off with a large amount of WTF airdrops, but only receive a very small amount of Ethereum.
Exchange 12,855 WTF for about 0.00001 WETH with a gas fee of $450| Source: Etherscan
Due to the serious liquidity problems caused by the trading bot, many users criticized Fees.wtf on Twitter. In response, the project’s developers posted an assessment of the situation on Discord, assuring the server’s 73,000 members that the smart contracts were not being tapped and liquidity issues were associated with it. However, many members criticized the decision to provide a WTF/WETH pool with such low liquidity, making it extremely easy for bots to manipulate this pool.
During the airdrop, the Fees.wtf development team announced that there will be a fee of 0.01 ETH in addition to the gas fee to claim the WTF airdrop. Users can generate a referral code on the fee.wtf website and get half the fee if other users use their code. The developers explained on Discord that they are implementing the fee to “keep promoting wtf” and thus “not having to allocate too many tokens to the development team”.
Fees.wtf also withdrew 150 Ethereum to Binance last week after accepting donations to the project. Interestingly, if 150 Ethereum is added to the pool before launch, bots will have a harder time exploiting the low liquidity. Fees.wtf has not yet commented on this.
Many critics have criticized Fees.wtf’s handling of the airdrop. Twitter users have level_crypto designation WTF is “Ponzi”. The fee.wtf server on Discord also received many complaints, with many members claiming they were “banned” from the group after questioning the payouts to Binance.
It should also be noted that the airdrop was intended to provide a temporary refund of gas fees that users had previously paid to use Ethereum, but it was this drop that caused gas fees to spike to absurd levels, resulting in a burned large amount of led gas Ethereum worth more than 7.6 million dollars.
WTF is currently trading at $0.122. According to Fees.wtf, the average number of tokens awarded is around 275 WTF. At current prices, the gas fees for claiming 275 tokens would far exceed their market value.
WTF Price Chart | Source: Coinmarketcap
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