A Developer Figured Out A Way to Fake Trading Volume for a Custom Token on Uniswap

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A Developer Figured Out A Way to Fake Trading Volume for a Custom Token on Uniswap

Mar 31 2021

Image: Yury / Adobe Stock

In brief

  • A new project, Delta.financial, recently launched on Ethereum and its protocol disrupted Uniswap’s volume stats.
  • The exchange suddenly saw over $6 billion in additional volume, which came from the project, but was not ‘real’ volume.
  • After the project’s contribution to the exchange’s volume was removed, an anonymous developer boosted it artificially in a hacking attack.

The world’s largest DEX, Uniswap, recently suffered an attack from an anonymous developer who was angry about the exchange’s decision to remove the volume of a project that disrupted its systems.

Recently, the world’s biggest DEX, Uniswap, set a new big record for the daily trading volume. However, the record has been rather short-lived and dubious, and it was quickly overshadowed by Delta.financial, who did it again, although through not exactly honest methods.

What happened?

Delta.financial is a DeFi protocol that is focused on removing volatility from options trading through liquidity stabilization. However, one of its anonymous developers apparently found a way to artificially boost trading volume for custom tokens on Uniswap.

The developer released a smart contract that allowed almost $11 billion of trading volume to be registered on the exchange in only 24 hours. While this would be considered a new record, Uniswap decided not to let it stand, and the new Delta volume was quickly invalidated.

The move is troublesome, as it shows that there is danger of rendering Uniswap’s statistics pretty much meaningless. The crypto industry — and particularly the DeFi sector — depends on transparency, and the more transparent a project is, the more trustworthy it becomes.

Up to this point, Uniswap never managed to do more than $2.22 billion in volume in 24 hours. This was its record, made back in October 2020, when a project known as Harvest Finance was hacked via flash loans from Uniswap exchange.

Now, only two days after Delta was launched on Ethereum, Uniswap managed to hit $7.17 billion in volume, with $6.13 million coming from Delta alone. It did not take long for everyone to see that something is wrong, and it took even shorter to learn who is responsible.

However, according to Uniswap Info, which keeps track of the exchange’s stats, Delta volume will be untracked. In other words, it will no longer count when it comes to the exchange’s global volume statistics.

After excluding it from calculations, the exchange’s volume once again dropped to $1.26 billion in 24 hours. The inflated volume comes from Delta’s liquidity rebasing system, which is an algorithm that allows Delta token minting to become more expensive over time. However, the algorithm also interacts with Uniswap’s liquidity pool, which makes it seem like there is a boost in trading. Uniswap’s creator Hayden Adams, said that this is not exactly wash trading, but it should also not be considered real volume.

The developer takes revenge on Uniswap

After Uniswap decided to filter out Delta trading, which was messing with its system, an anonymous developer at CORE hacked the system and allowed anyone to change and disrupt Uniswap Info’s stats.

With Uniswap’s volume pushing past the $10 billion mark, this attack has seriously disrupted the exchange, and it was revealed that the attack will not stop until Delta trading history is returned, and Uniswap apologizes for ‘abusing centralized power.’

Not only that, but a new token emerged under the name You Don’t Blacklist Delta.financial, which labeled ‘Ian Laphan fan token’ accounts for $10.96 billion in volume, even though the project’s actual liquidity is less than 1 cent.

So far, many have defended Uniswap’s approach and criticized the move of 0xRevert, which is the name that the anonymous developer is using.