DeFi ‘Incident’ on Uniswap Brings Trader Massive Profit in Minutes
A recently discovered ‘incident’ on the popular decentralized token swap platform Uniswap has sparked a discussion online, as some claim that an algorithm drove up the price of the bZx protocol’s BZRX token and then “dumped” it on retail users.
The discussion today first started after Roman Storm, Founder of cybersecurity firm PepperSec, shared a tweet that claimed to unveil “how someone made a million dollar in 30 [minutes],” listing up three steps that explained exactly what happened as the BZRX token got listed on Uniswap. However, later, Storm added that the profit is "2030 eth + 300k BZRX," which is now worth around USD 533,000.
The tweet went on to receive lots of attention from the DeFi (decentralized finance) community on Twitter, while also receiving criticism from many, including the team behind the bZx protocol, which claimed the incident was nothing else than “a correctly placed directional trade.”
This comment is going viral without mentioning that this wasn't an arbitrage, it was a correctly placed directional… https://t.co/JhPZaTH9ZH— bZx (@bzxHQ)
Meanwhile, Scott Lewis of the Concourse Open Community said that the bot that bought up BZRX tokens immediately after they got listed was “NOT a DeFi accident or incident or anything,” but just normal trading:
“The script writer had a simple opinion, that the listing price was too low, and expressed it in the market. The market price was higher afterwards. That’s ok,” Lewis wrote.
Finally, Roman Storm also came out with another tweet to clarify his position on the incident, saying that it was “not an exploit nor a hack.” Instead, he said he simply wanted to show that IDOs (initial DEX offerings, or token sales on a decentralized exchange) on Uniswap “still have problems with front running.”
“My intent was to teach the community about technical details of [DeFi] bots on [Ethereum],” he added.
Some users also came to Storm’s defense, wondering how it can be in companies’ interest to have token sales happen in this way. “The next company doing a token sale knows what issues there are and I am wondering if they will keep using Uniswap or use a dutch auction for example,” one Twitter user said.
@sassal0x It's more that Uniswap is a poor place to do a popular token sale. Leaving out the front running bots, vo… https://t.co/BHCfxYqf0K— Skynet.eth (@cryptokeeper8)
According to data from Etherscan, BZRX was trading for USD 0.1633 as of press time on Tuesday (09:11 UTC), and has a fully diluted market capitalization of USD 168.2 million, positioning it among the top 60 most valuable cryptoassets.