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The most tragic airdrop WTF in history, someone took over $1 billion in unit price

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This is a zero-sum game caused by MEV bots, each trying to drain the nascent liquidity pool as quickly as possible, hurting each other in the process.

Original author: meows.eth, partner of Cats Capital; Wazz, encryption enthusiast

Original compilation: 0x137, Rhythm BlockBeats

This article is based on the opinions published by encryption enthusiast Wazz and Cats Capital partner meows.eth on their personal social media platforms. Rhythm BlockBeats organizes and translates them as follows:

Fees.wtf is a dApp, after connecting it to your Ethereum wallet, it can tell you how much you spend on Ethereum gas fees, protocol Following the model launched by the free airdrops such as SOS and GAS.

WTF is a newly released dApp Token on Ethereum, but "WTF" may have become the most spoken sentence by people who bought Token this morning. This morning's WTF airdrop was nothing short of a massacre. While not a rug-pull, some MEV bots have taken over $100,000 in profits like bandits due to mishandling by the team.

Let's see what happened.

First of all, we need to understand what is a liquidity pool (LP). It is how the DeFi protocol works, individuals can add liquidity to a specific trading pair (Pair) (WETH - WTF in this case) to allow buyers and sellers to conduct quick transactions, while LP participants can earn a certain Proportional protocol transaction fees are used as incentives.

Of course, people may be able to withdraw this liquidity at any time, but one of the risks is the so-called "Impermanent Loss". Simply put, liquidity providers may withdraw funds from the pool that are worth less than what was originally provided.

When WTF was issued, developers added a certain amount of WTF liquidity to the pool. Specifically, they added 2211.46 WTF.

However the team barely added WETH (0.0 0001 ETH)

Immediately afterwards, a robot that intends to drain the liquidity pool began to operate, and a robot purchased 2211.45 WTF from the pool at a price of 2 ETH. This caused the price of WTF to skyrocket, while other addresses trying to buy the remaining 0.01 WTF paid increasing fees.

At this time, the WETH - WTF trading pair has accumulated dozens of ETH due to robot purchases, and there is almost no WTF left in the pool, which means This means that selling any amount of WTF will result in huge profits.

We can look at the details of this process in detail:

One address first purchased "a little bit" of WTF (worth 10 ETH at the time).

Then, this address is in the next block with 30 00 The speed of gwei sent a super fast transaction, selling their previously purchased WTF at nearly 6 times higher than the original price, successfully withdrawing 58 ETH of liquidity from the WETH - WTF pool.

Finally the liquidity pool becomes fully tilted. And when the robot is sniping liquidity, some users who are too FOMO are still spending a lot of ETH to buy a smaller and smaller amount of WTF.

For example, this address bought 22 ETH and only bought 2.34 WTF.

Afterwards, more liquidity was added to the pool , MEV bots (specifically MEV Bot: 0x000...B40) began attacking thousands of users at once.

For example, a robot used a $2.7 million Flashloan to squeeze $2,000 from an address through a sandwich attack. In the end, this address only bought about 0.0000000019 WTF (Rhythm calculated that the user bought WTF at a unit price of nearly 1.04 billion Dollar).

As of now, the price of WTF is hovering around $0.20. In my opinion, this is all caused by the MEV bots, each trying to drain the nascent liquidity pool as fast as possible, hurting each other in the process. It was a zero-sum game, and in the end the robot mentioned above won.

What lessons can we learn from this?

Unless you're trying to control initial liquidity, don't FOMO into freshly launched high-slippage altcoins, it's likely to cost you big. And for free airdrops like this, there is no need to pay too much attention to the benefits you "could" get.