Mystiko Network has been accused of insider trading by the community since its second airdrop.
After the second Mystiko Network (XZK) token airdrop, widespread community outrage erupted when the community noticed that two addresses received significantly more tokens than most other participants.
According to blockchain data, wallet “0xBca” in particular received 59,570 XZK ($1,787), while wallet “oxda8” received 60,325 XZK tokens ($2,170) in the airdrop.
However, most of the other airdrop participants received between 400 and 5,740 XZK tokens, worth up to $172.
Cryptocurrency airdrops have gained attention in 2024 because many airdrop hunters (or illegal residents) are professional airdrop hunters who farm the same airdrops with multiple cryptocurrency wallets and sell the rewards on the market with no intention of using the protocol in the long term.
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The Mystiko network claims that both wallet addresses are core community members.
When asked about the insider trading allegations, Mystiko Discord administrator Ellie said the claims were “baseless,” but declined to elaborate further.
“You can see our public Twitter response, it’s completely baseless and a quick search on the blockchain will show you that it’s not true.”
Mystiko Network claimed in a public response that the two addresses that received significantly more rewards than the July 25th X post were early protocol contributors.
“This address appears to match the criteria established for early contributors to our ecosystem, with multiple transactions taking place within the network.”
Mystiko also provided on-chain evidence that two wallets had initially interacted with the protocol, though Cointelegraph was unable to confirm whether these wallets belonged to an insider or a regular user.
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Will Crypto Airdrops Hurt the DeFi Ecosystem in the Long Term?
Cryptocurrency airdrops can be detrimental to decentralized finance (DeFi) protocols and the broader ecosystem in the long run.
This is because a significant portion of the airdrop is filled with illegal residents who only sell rewards, then apply downward pressure on the protocol without using it at all.
February, Banteg, developer of Yearn.finance under the pseudonym I warned you Starknet’s airdrop eligible list primarily included airdrop squatters. Of the 1.3 million eligible wallet addresses, approximately 701,544 were reportedly linked to duplicate or renamed GitHub accounts controlled by airdrop squatters.
In March 2023, it was revealed that airdrop hunters had consolidated $3.3 million worth of tokens from the Arbitrum (ARB) airdrop from 1,496 wallets into two wallets under their control.
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