2 - 4 minute read
Airdrops have become increasingly popular among decentralized finance (DeFi) projects as a means to attract users and encourage activity on their blockchains. However, this method has opened the door to a new form of attack by Sybil Millionaires, who take advantage of projects’ weakness to identify and weed out fake accounts.
Sybil attacks occur when a person or group spin up multiple accounts on a blockchain project that is expected to airdrop its tokens, then snap as many tokens as possible. After acquiring these tokens, they sell them off, causing the price of the token to drop.
Ilya, a 33-year-old Ukrainian, is one of many crypto traders who make money from these attacks. He explained that by creating multiple accounts, he was able to get an increased return on a single airdrop which, in some cases, could net him several million dollars in crypto. For example, during the recent airdrop in Arbitrum, users and entities controlling multiple addresses were found to have received almost 48% of all tokens distributed.
One person I know got 200,000 tokens from several thousand accounts
To identify profitable airdrops, hunters monitor multiple projects that satisfy specific criteria. These projects must be well-known, have a lot of funds raised, have reputable investors, generate hype and be relevant to what’s happening in crypto at the moment.
However, the risk of losing money is always present, as DeFi protocols have become hackers’ favourite target, with cross-chain bridges appearing to be one of the most attractive targets for attacks. Even so, some airdrop hunters have made significant sums of money, with some earning as much as $500,000 from a single airdrop.
Sybil attacks are a potential threat to DeFi projects and token holders, and it is important to remain vigilant and aware of the risks involved in participating in airdrops. Despite the risks, airdrop hunters are constantly searching for the next big opportunity, illustrating the constant evolution and adaptation of the crypto market.