Discovery of Individual Creating a Private DEX to Hunt zkSync Airdrops with 22,000 Wallets

By 0xGorki 09/11/23 12:35 PM

In a startling revelation, a vigilant user on the social media platform Twitter, with the handle @lingland09, exposed a massive Sybil wallet operation involving nearly 22,000 zkSync wallets. The alleged purpose behind this operation was to exploit airdrops. The identity of the individual responsible for this operation remains a subject of speculation within the cryptocurrency community.

The Sybil operation came to light on September 11, 2023, when @lingland09 noticed a cluster of 21,877 zkSync wallets sharing a common “origin” tied to a single individual. The tweet raised alarm bells, as it hinted at a sophisticated maneuver to game the system.

🚨Warning: 21877 sybil wallets by one person #zkSync

Let’s disclosure this individuals sybil tactics, he funded all of his wallets with very small amounts of ether, then he deployed Gemstone ( $GEM ) token that wasn’t open source. (https://t.co/UXS2O2fivg)
++ pic.twitter.com/firJbfcdfL

— Lingland 09. ∎ (@lingland09) September 10, 2023

The Sybil tactic involved a series of intricate steps:

Initial Funding: The perpetrator funded all of the wallets with minimal amounts of Ether.
Gemstone Token Creation: A non-open-source token called Gemstone ($GEM) was deployed (viewable here: zkSync Explorer).
Whitelisting: All 21,877 wallets were whitelisted, allowing the individual to claim all the self-deployed tokens.
Custom Decentralized Exchange (DEX): The individual went a step further and created a non-open-sourced DEX, effectively building a decentralized exchange exclusively for transactions between his wallets (DEX-Pool).
Liquidity Addition: Substantial liquidity, amounting to over 80 ETH, was added to the $GEM tokens within his DEX contract. This boosted the token’s value.
Profit Accumulation: The individual proceeded to trade $GEM tokens claimed from the 21,877 wallets against ETH, earning a profit ranging from 0.6 to 0.7 ETH in value. This process was executed through a bot, not manually.

The meticulous planning ensured that the individual evaded slippage, enabling them to execute 10 transactions on the zkSync Era network with minimal gas fees per wallet.

@lingland09 emphasized that this person adjusted liquidity as needed, executed transactions over various months, weeks, and days to mimic the patterns of other Layer-2 projects, and accumulated a significant volume of trades while spending only 1.5 to 2 USD worth of ETH fees per wallet.

This massive Sybil operation was uncovered thanks to the diligence of the Twitter user. The perpetrator’s actions were brought to the attention of zkSync’s team, including Matter Labs, which has been actively developing zkSync as a Layer-2 solution for Ethereum.

It’s worth noting that zkSync has garnered significant support and funding from major players in the cryptocurrency industry, making it an appealing target for airdrop hunters and opportunistic actors.

While zkSync has not officially confirmed any airdrop events, the recent integration of ETH deposits and withdrawals on the zkSync Era network by leading cryptocurrency exchange Binance has fueled speculation. Many in the cryptocurrency community hope that zkSync will follow the footsteps of Arbitrum and Optimism (OP Mainnet) in hosting a substantial airdrop event to reinvigorate market interest.

In conclusion, the exposure of this extensive Sybil wallet operation underscores the need for vigilance in the cryptocurrency space. While the identity of the individual behind the operation remains a mystery, the incident serves as a reminder that transparency and security are paramount in decentralized ecosystems like zkSync.

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