PancakeSwap’s recent $250,000 trading competition, with promises of random prize draws for participants, has come under scrutiny due to blockchain analysis revealing that roughly half of the winning wallets may be connected – raising questions over its reward distribution process and raising suspicion of potential collusion within winning wallets. Cointelegraph reported this issue.
Blockchain Analysis Reveals Connected Wallets
This competition, running from July 7 to August 5, required participants to trade tokens from five Binance Alpha projects: League of Traders (LOT), Bedrock DAO (BR), MilkyWay (MILK), NodeOps (NODE), and Moonveil (MORE) on PancakeSwap. In order to qualify for the random draw, traders needed to meet specific trading volume thresholds; however, blockchain records suggest that over 850 winning wallets may have engaged in wash trading–repeatedly buying or selling tokens among themselves using BNB in order to artificially inflate trading volumes until meeting thresholds were met, then transferred back out again until thresholds met then repeated with new winners–this cycle repeated itself until required thresholds met and BNB was transferred onwards until it found new winning wallets until another network formed and started this cycle–cointelegraph
Evidence of Wash Trading
Careful examination of wallet activity reveals evidence of wash trading. For example, one tier-three winner received 21,730 LOT tokens from the competition’s reward wallet, but their transaction history shows they swapped them out with Wrapped BNB (WBNB) before exchanging back for BNB to send to other winning wallets in an apparent coordinated effort to manipulate the system. As reported by Cointelegraph this process occurred across multiple wallets suggesting coordinated efforts at manipulating it for personal gain.
Impact on Trust and Transparency
PancakeSwap’s prize distribution system was severely undermined by the discovery of interconnected wallets, leaving many participants who followed all rules and traded honestly feeling disenfranchised as they believe that competition was unfairly biased in favor of those exploiting its system. League of Traders, one of the competition sponsors, raised concerns that prizes weren’t distributed fairly and winners appeared “handpicked” rather than randomly selected; Cointelegraph reported on these concerns in its article here.
Calls for Increased Transparency
On account of these findings, there is growing demand for greater transparency in PancakeSwap’s reward distribution processes. Blockchain analysis has proven effective at uncovering fraudulent activity; similar scrutiny should be applied to future competitions to ensure fairness. Furthermore, taking measures to detect and prevent wash trading would help preserve the integrity of PancakeSwap’s reward systems.
PancakeSwap has not responded to requests for comment regarding this matter. As the DeFi space continues to develop, transparency and fairness in reward distribution will become ever more essential in maintaining user trust and platform credibility.
