Key Takeaways
Trading bots have extracted hundreds of Ethereum from the WTF/WETH liquidity pool on Uniswap.
The fees.wtf team did not supply enough liquidity to the pool, making it easy for bots to manipulate the price of the WTF token.
Many crypto users have expressed their dissatisfaction with how the airdrop was handled.
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Trading bots battled to front-run each other’s WTF token trades following fees.wtf’s airdrop early Friday. Some bots made off with thousands of dollars in profit, and many early traders got caught in the crossfire.
Bots Attack fees.wtf Airdrop
The fees.wtf airdrop has uncovered the cutthroat world of botting on Ethereum.
fees.wtf, a site that allows Ethereum users to check how much gas they’ve spent on transactions, commenced its highly-anticipated token airdrop early Friday. Ethereum users were allocated WTF tokens depending on how much gas they had spent on transactions and how many failed transactions they had incurred.
The airdrop followed several similar Ethereum token distributions over the last few weeks. On Christmas Eve, OpenDAO dropped its SOS token to OpenSea NFT traders. Following that, Gas DAO and LooksRare launched their tokens in quick succession. However, while the developers of previous airdrops ensured their trading pools were filled with enough liquidity to facilitate trades, it appears that fees.wtf did not.
According to Etherscan data, the initial liquidity supplied to the WTF/WETH pool on Uniswap totaled only 2,211 WTF and 0.000001 WETH. As soon as the pool was set up, trading bots jumped in, draining liquidity and causing the WTF token to spike in price. Subsequent bots that attempted to drain the liquidity ended up paying large amounts of Ethereum for increasingly small amounts of WTF tokens.
Chart showing the highest prices users paid for WTF tokens. (Source: @Substreight)
While some of these transactions were sandwich attacks from advanced MEV bots, some also appear to be from traders getting caught by extreme slippage and bots that were too slow in extracting liquidity. Users who were not familiar with Uniswap’s advanced features sent transactions with 95 to 99% slippage, meaning that they only received a tiny fraction of what they were expecting from the trade due to the low liquidity of the pool.
One bot extracted 58 ETH from the liquidity pool by first buying up all of the pool’s remaining WTF tokens in its first transaction, only to sell them back for nearly six times the price it paid. The bot was able to do this by paying approximately $2,854 in gas to ensure its transactions would be processed before anyone else’s.
Another bot spent 850 ETH to buy 97 WTF tokens, putting the price per token at over $28,600. However, like the previous bot, this transaction was part of a complex MEV strategy, which ended up yielding the bot a net profit of 0.08 ETH once gas fees were taken into account.
While the trading bots battled it out in the low liquidity WTF/WETH pool, it’s highly likely that other individual traders got caught in the crossfire. On-chain data shows multiple transactions of users attempting to cash in large amounts of airdropped WTF tokens only to receive pennies worth of Ethereum in return.
Swapping 12,855 $WTF for about $.07 in WETH, with a gas fee of $450. (Source: Etherscan)
Due to severe liquidity issues caused by trading bots, many crypto enthusiasts took to Twitter to criticize fees.wtf. In response, the project’s developers posted an assessment of the situation on Discord, assuring the server’s 73,000 members that the smart contracts had not been exploited and that the liquidity issues were related to Uniswap. However, many discord members were critical of the decision to launch the WTF/WETH pool with such a low level of liquidity, making it extremely easy for bots to manipulate the pool.
In the run-up to the airdrop, the fees.wtf team announced that there would be a 0.01 ETH fee to claim the WTF token airdrop on top of gas fees. Users could generate referral codes on the fees.wtf website, and they would receive half of the fee if another user claimed using their code. The developers explained on Discord that they implemented the fee to “help make wtf go viral” and so “the team doesn’t have to take a huge allocation of wtf tokens.”
fees.wtf has also raised eyebrows after it withdrew 150 Ethereum to Binance last week after accepting donations to the project. Interestingly, bots would have had a harder time taking advantage of the low liquidity if the 150 Ethereum had been added to the pool prior to its launch. fees.wtf is yet to comment on the issue.
Critics have slammed fees.wtf over its handling of the airdrop. One Twitter user operating under the handle @levels_crypto described the WTF token as a “ponzi.” The fees.wtf Discord server is also littered with complaints, with many members alleging that they were banned by the team after asking questions about the Binance withdrawal.
It’s also worth noting that the airdrop was meant to provide a makeshift rebate for the gas fees users had previously paid to use Ethereum, but the drop itself caused gas fees to spike to absurd levels, resulting in over $7.6 million worth of Ethereum being burned in the process. “ironic,” the fees.wtf Twitter account noted in reference to the high levels of gas consumption.
The WTF token currently trades at $0.09. According to fees.wtf, the average amount of tokens awarded is around 275 WTF. At current prices, the gas fees to claim 275 tokens would far surpass their market value.
Disclosure: At the time of writing this feature, the author owned ETH and several other cryptocurrencies. He was also eligible for the Fees.wtf airdrop.
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