In the midst of soaring prices, a surge in counterfeit farm accounts, also known as “Sybil attacks,” has been observed in many crypto projects. These fake accounts generate artificial network activity in order to collect as many tokens as possible during airdrop events, which have become highly profitable over the years.
The creators of the Degen memecoin project, which was built on the Farcaster social media protocol, recently took action by banning approximately 2,000 users suspected of farming Degen. They warned that participating in Degen farming, such as coordinated posting or artificial engagement, could result in bans. The Degen airdrop, which rewards users who engage with or create quality content on Farcaster social channels, is ongoing until August 1. However, it seems that a significant number of users have started posting subpar content solely to earn airdrop points. Degen stated that engaging in organized actions primarily for the purpose of earning tokens and posting unrelated content in boosted channels would lead to bans.
Degen’s warning to Sybil attackers. Source: Degen
The Degen memecoin project is not the first protocol to fall victim to Sybil attacks. Bitget Wallet, a self-custody wallet, recently announced that it would deduct airdrop points from users who use emulators and cloud phones to create artificial wallet referrals and downloads for farming BWB token rewards. Bitget Wallet emphasized the importance of fairness and integrity for all participants, stating that they will not tolerate any dishonest behavior that violates the rules of conduct for the event. The Bitget Wallet airdrop, which has been ongoing for the past month and is set to end on April 27, allows users to earn rewards by referring friends, depositing tokens, or performing decentralized finance (DeFi) swaps through the self-custody wallet.
Despite efforts to identify and address the issue, cracking down on Sybil attacks remains challenging. Bitget Wallet explained that they have only deducted points from the top 50 users who boosted their referral points through illicit means to avoid penalizing honest users. Earlier this year, prominent DeFi developer Banteg raised concerns about the Ethereum layer-2 protocol Starknet and its airdrop. They discovered numerous people who had renamed or deleted their accounts since the activity snapshot, as well as a large number of addresses allegedly linked to repeat or renamed GitHub accounts controlled by airdrop farmers. However, these airdrop farmers’ addresses were still included in the Starknet airdrop. Shortly after its launch, Starknet briefly reached a fully diluted valuation of $20 billion. The airdrop is ongoing until June.
In a report by Gamic HQ last August, researchers explained that Sybil attacks involve the use of scripts or bots to create a large number of fake accounts on a targeted platform. These accounts then automate tasks such as generating random usernames and emails, filling out registration forms, and even verifying accounts with CAPTCHAs. Gamic HQ also noted that Sybil attacks result in a significant portion of the airdropped tokens being collected by counterfeit users, leaving less for genuine users who may have a long-term interest in using and supporting the project. This damages the project’s reputation, inflates its token supply, and may lead to price manipulation through excessive dumping by airdrop farmers after the event ends.
However, Gamic HQ also pointed out some positive outcomes of these attacks. They claimed that the rise of Sybil attacks has compelled blockchain projects to develop more sophisticated methods of verifying user identities and ensuring fair distribution of airdrops. They believe that this ongoing battle will ultimately contribute to a more robust and secure blockchain ecosystem in the long run.
Related: Blockchain data-availability protocol Avail announces a 600M token airdrop.