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Sybil Millionaire: How do parachute hunters capture wealth

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It's not arcane science, it's just business as usual.

原文标题：《 Sybil 百万富翁：空投猎人如何夺取财富》

Source: BitpushNews

"You can create up to 10 qualified accounts in a single night," said Ilya, a 33-year-old Ukrainian. "It's not rocket science, it's just routine work." Ilya is also trading cryptocurrencies for profit, but airdrops have taken up most of his time over the past few months.

Ilya is one of many cryptocurrency traders who have made money from the Airdrop Sybil Attack. In other words, they create multiple accounts on the blockchain project where they are expected to airdrop their tokens, and then grab as many airdropped tokens as possible. (The "Sybil" attack came from a 1973 book about a woman with split personality disorder.)

The attacks took advantage of the program's weak ability to identify and weed out fake accounts, generating tens to hundreds of thousands of dollars per airdrop. They sold the coins as soon as they got them.

Free money contest

The way the Decentralized Finance (DeFi) project distributes tokens for free to active members of its blockchain community is called an airdrop. Airdrops can attract more users and encourage activities on the project's blockchain, such as providing liquidity for decentralized exchanges, interacting with smart contracts, and other transactions.

With the airdrop, the project tries to identify and reward active users without issuing tokens to people who create accounts to capture tokens one minute before the airdrop without actually participating in the project. These people would immediately sell the tokens, which would drive down the price of the tokens.

The Sybil attackers have been trying to trick the system by mimicking the healthy blockchain activity of multiple accounts of a person or team. As a result, organizing an airdrop becomes an endless game of whack-a-mole for the project.

For example, according to the researchers, recently expanded protocols for Ethereum. Arbitrum In the airdrop, users and entities controlling multiple addresses received nearly 48 percent of the allocated tokens.

Sybil is a millionaire

Ilya, 33, has been speculating in cryptocurrencies for the past six years. "I joined the space before the late 2016 ICO boom," he said. He used to be a small business owner who traded grain in Ukraine. That all changed when he learned about cryptocurrencies. He invested in several initial coin offerings and multiplied his returns tenfold.

After the ICO craze came IEOs (initial exchange offerings), then the DeFi craze of 2020, and then the craze for non-homogeneous tokens (NFT). "If you can get ahead of a trend, it's an opportunity to give money away for free, and airdrops are just the latest hot opportunity. One person I know got 200,000 tokens from thousands of accounts," Ilya said.

Founder of Hypra Venture Fund "Airdrops are a more legally secure way to distribute project tokens than ICOs," says Igor Pertsiya. "A particularly sophisticated Sybil attacker can steal up to millions of dollars of cryptocurrencies from a single airdrop. Targets include Ethereum Name Services (ENS), Sui, Aptos Etc."

"I know people who made $1 million to $2 million just from Arbitrum," Pertsiya said. "Unlike ICOs, which are a lot more like Ponzi schemes, people involved in airdrops don't talk about it much because the more people want to join, the less each person gets."

This is not an isolated case. Blockchain researchers have found crypto wallets that have accumulated more than $1 million worth of Arbitrum ARB tokens from multiple other wallets, suggesting they belong to the same person. In some cases, the wallets were later found to belong to phishing scammers who stole money from multiple victims' wallets.

Some multi-account users accumulate smaller total tokens. After confirming the balance snapshot and identifying a list of eligible wallets, the researchers found at least 198 addresses collecting money from multiple other addresses.

"Not an arcane science"

Ilya said he was not one of those Arbitrum millionaires, and some of his accounts were detected as part of the Sybil attack and excluded from the airdrop. But the five accounts he set up did manage to receive 20. 000 ARB tokens, almost the maximum amount an account could receive during the airdrop (10, 250 tokens) twice as much.

Ilya didn't hesitate to sell the tokens for $1.40 each, making a profit that far exceeded his expenses: He said he had to pay about $50 in Gas fees for Internet transactions to keep his account from being excluded by the anti-witch mechanism.

"Some people I know got 200, 000 tokens from thousands of accounts," Ilya says. "He has a team of people who manage 500 accounts each."

Ilya has only one employee to help him manage the account, and he is paid a fixed salary and a portion of the profits from the airdrop. He says it does not take technical expertise to identify profitable airdrops. Just being able to analyze social dynamics and sense what's next is enough." You can create up to 10 premium accounts in one night. It's not arcane science, it's just business as usual.

"Keeping these accounts active is not an artful technology," says Ilya. "Even high school students can have a bunch of effective blockchain wallets to make money from airdrops. I know people who aren't even 18 years old yet who run 150 accounts each, one of whom recently made $500,000 from airdrops."

"People in their 20s missed out on the ICO boom," Pertsiya said. "It's a new generation of young, hungry people."

Take a risk

You never know which project will airdrop tokens on a given day, so airdrop hunters are monitoring multiple seemingly promising projects. What are the criteria for promising?

"It should be well known, raise a lot of money, have a lot of developers and reputable investors, and have projects relevant to the current cryptocurrency market," Ilya said. He believes current projects that meet these criteria include zksynk, StarkNet, and LayerZero, as well as everything related to Ethereum extensions.

While waiting for the airdrop, the hunters risk losing money if the project is hacked and all liquidity is used up. Analysis companies according to blockchain. Chainalysis The DeFi protocol has become a favorite target of hackers, losing $2 billion in 2022 alone. In particular, cross-chain Bridges seem to be one of the most attractive targets.

"People will pour money into projects that they hope will get airdrops in the future, and then that bridge gets hacked, and some hackers steal $5,000 of your money," Ilya said. Ilya says he doesn't remember how much he lost in such attacks, but he knows people who lost up to $10,000 worth of tokens in Euler Loan Agreements that were recently targeted. Although the attackers voluntarily returned the funds.

Airdrop hunter

Alex Momot, CEO of cryptocurrency startup Peanut Trade, said his team has been closely monitoring the airdrop Sybil attack. One of the services Peanut provides is to help DeFi programs avoid such abuse. Typically, he says, the strategy of the drop hunter is simple: just make the minimum transactions and use the minimum amount of tokens in order to meet the eligibility threshold.

Hunters often replenish their wallets by withdrawing funds from centralized exchanges. Because all of these withdrawals are processed from the exchange's hot wallet, which aggregates multiple users' coins in one place, there is no way to see who actually withdrew the tokens. This makes it difficult to identify which wallet is actually receiving funds from the same wallet."

However, there are still ways to exclude drop hunters with multiple accounts from the drop. For example, the project might eliminate wallets that barely meet the threshold.

"On the one hand, it's not a bad thing," Momot says. "Projects can get some attention this way, but they're interested in building real communities and gaining real momentum, and worst of all, projects lose millions of dollars in market value when they go public because users immediately sell them."