Leek Harvesting Guide: A Review of XIRTAM from Opening to Running Away in One Night

Author: Go2Mars Research

On May 3, 2023, while the public was still enjoying the afterglow of the May Day holiday, many friends in the crypto circle found the night far from easy. In the dead of night, many investors did not anticipate that the recently hyped "Golden Dog" XIRTAM—after being listed on SushiSwap at midnight—would plummet from $0.02 to $0.0018, with a market cap crashing by 90% in just a few hours, making it a notorious case in the crypto world akin to BitRun. After multiple verifications, it can be confirmed that this is a scheme packaged as a foreign project but actually run by locals.

So, how is a crypto scam like this created? What characteristics should an excellent "scam" project possess? How is the public's FOMO (Fear of Missing Out) emotion triggered? What stakeholders are involved in the process of the project team running away?

To find answers to these questions, we chose to conduct an in-depth analysis of the XIRTAM project. This is not just a project study; more importantly, it aims to sound an alarm for many friends in advance to avoid losses in similar cases in the future.

A Scam Packaged as a Q&A Game: Introduction to the XIRTAM Project

Looking back at the birth of XIRTAM, it must be said that the project team found a good foothold. XIRTAM is the first protocol proof deployed on ARBITRUM. It is worth noting that ARBITRUM is a project with a good level of completion and user experience in L2, currently having a circulating market cap of $166.669 billion, accounting for 0.14% of the global total market cap. Among them, the star project ARBDOGE focuses on AI + community co-construction, and its market cap is still above $100 million.

Returning to XIRTAM itself, the project team's introduction is quite straightforward: The world's first advanced non-KYC blockchain reputation establishment system.

Flipping through the project's white paper reveals that XIRTAM aims to create a free Play-to-Earn game world, allowing players to participate without purchasing any entry tickets. The ultimate goal stated in the white paper is to enable the community to embrace various game roles and freely manage a decentralized player-owned economy.

So, what efforts did the project team make in mechanism design and packaging to achieve the grand goals of the white paper?

Proof-of-One Mechanism

Many project teams tend to use some obscure or incomprehensible new concepts to highlight their uniqueness. For example, we can try to take the first letters of an English sentence, capitalize them, and form a new word, which can elevate the tone. Go2Mars "Crypto Leek Harvesting Guide" First Rule

In XIRTAM, the project team proposed a reputation-based mechanism called Proof-of-One (P.o.O), where users can build their reputation through various internal platforms, ultimately becoming part of the consensus group that determines the protocol's status. The project team claims that they can leverage the power of reputation to establish a reliable, permissionless blockchain-based Proof of One protocol, allowing users to participate, compete, and earn rewards. This brings high-quality gameplay and entertainment content into the next generation of engaging Q&A competitions, ensuring fairness while providing competitive guarantees. Game Mechanism

In the crypto circle, if you are involved in gaming (Gamefi), people do not care how interesting your game mechanics are, as long as you can make these speculators money, or at least pretend they can make money. Go2Mars "Crypto Leek Harvesting Guide" Second Rule

Invite all users to participate in monthly competitions to test their knowledge of blockchain and crypto-related topics. Each month, users can answer a certain number of questions to earn points, with options including true or false and multiple-choice, allowing users to earn cryptocurrency while playing and winning, rewarding the winners. Selecting those with deeper reputations and sustained drive makes them more comprehensive in the crypto field, managing the network.

Of course, since it involves earning cryptocurrency, it naturally led to the introduction of its native token $XIRTAM to power the ecosystem.

The project team claims that XIRTAM allows anyone, especially the working class, to showcase their understanding of blockchain without worrying about any financial leverage. Does it remind you of quiz shows like "Quiz Up" or "The Brain"? That's right, it's a Q&A game.

PvP Arena

But since it is ostensibly a crypto project, the game mechanics cannot be designed too overtly; appropriately increasing interaction between players is more conducive to the growth of user (leek) numbers. Go2Mars "Crypto Leek Harvesting Guide" Third Rule

Looking at the economic model of PvP battles, this action returns to the original GameFi theme, but one point that has always been criticized in previous GameFi projects is that players engage in zero-sum games, lacking positive externalities.

What we learned from the XIRTAM project team is the source of positive externalities, just like StepN attracted many running enthusiasts to participate. Players can bet on themselves in competitions, using their expertise to win bets and earn rewards.

Governance Rights

Allowing users (leeks) to gain a so-called "sense of participation" is the best protection and disguise for the scheme. Go2Mars "Crypto Leek Harvesting Guide" Fourth Rule

The so-called user autonomy is essentially a manifestation of winner-takes-all, which can be used to incentivize everyone to learn knowledge or cheat. The highest scorers will not only maintain anonymity and a vague social identity system on the blockchain but will also be granted voting rights to express opinions on the direction of XIRTAM. The project team will encourage lower-scoring users to strive to learn blockchain knowledge and develop cognitive skills to earn such rewards.

XIRTAM's Token Governance

If a project claims no VC involvement and the founding team retains no shares, there is a 99.9% chance it is a scam project, and a 0.01% chance it is a great decentralized attempt. Go2Mars "Crypto Leek Harvesting Guide" Fifth Rule

Each time the native token $XIRTAM is bought or sold, a portion of the tax will be directly allocated to a monthly prize pool, which will be evenly distributed among the top 10 scorers of that specific month. Only by continuously striving to learn more about cryptocurrency, participating in every meeting, and earning a reputation in the top ten scorers of the monthly leaderboard can one gain access to this pool. If we look at its tokenomics, we find that the XIRTAM team specifically claims on their official website that they have no VC fund involvement and no team token retention. Of course, this statement should raise caution, as you do not know that they are actually targeting your principal. From Project Initiation to Runaway: Analysis of the XIRTAM Incident Looking back at XIRTAM's historical tweets, the project team first proposed the concept of XIRTAM in January of this year, and from January to early May, it was a cycle, with the peak promotion starting in March, during which the phenomenon of KOLs in the Chinese community hyping it was quite evident. XIRTAM's Fundraising Journey

The harvesting of leeks emphasizes speed and efficiency; a project can be laid out for a long time, but the actual harvesting often happens in an instant. But be aware that the turnover of funds is also a matter that requires careful consideration. Go2Mars "Crypto Leek Harvesting Guide" Sixth Rule

From April 23 to 26, the project team conducted a public fundraising at FjordFoundry, successfully raising $2.11 million, with the ending price at $0.0456.

Subsequently, the project team announced a public offering on Alienficoin on April 26. AlienFi is an Arbitrum ecosystem DEX and fundraising platform. The XIRTAM project team was supposed to launch an IAO (Initial Airdrop Offering) with AlienFi on April 26, but due to concealing a previous invisible seed round fundraising of 310 ETH at a unit price of $0.0125, AlienFi canceled XIRTAM's IAO qualification.

In the public presale on the 29th, the project team raised 633 ETH at a unit price of $0.037 on Pincubator_io, after which they mapped the tokens to Arbitrum.

Ultimately, XIRTAM was listed on SushiSwap for trading in the early hours of the 3rd, adding only 20 ETH of liquidity, leading to a sharp drop in the token price. A few hours later, the project hit rock bottom and is still struggling at that low point.

XIRTAM raised a total of about 2000 ETH over several rounds. Interestingly, the project team that subsequently ran away transferred the raised ETH to Binance, which has now assisted in freezing the funds. Victims are urged to gather evidence of their losses and report to the police, submitting it to customer service, indicating that the project team's experience in running away is lacking.

Security Audit? KYC?

High-end PR packaging often appears in the form of security audits and KYC. Go2Mars "Crypto Leek Harvesting Guide" Seventh Rule

Based on past security audit cases, similar phenomena occasionally occur:

• Day 1: The project team announces the completion of a security audit;
• Day 2: The project team announces achieving a liquidity TVL of XXX million dollars;
• Day 3: The project team runs away with the funds.

The audit opinions from auditing firms are usually "standard unqualified opinions"—if this were to happen in the web2 world, a listed company would likely have its accounting firm's license revoked long ago. However, in the crypto world, security audits are often unreliable, and many companies that have undergone security audits still run away, as if the audit reports are of no use at all.

This brings us back to the agency problem—under the current lack of a reasonable punitive mechanism, who pays the security audit companies? Who do they work for?—It is evident that without clear punitive measures, so-called security audit reports are merely high-level PR articles.

As for KYC, there is no need to mention it further, as the avatars and core team on the official website claim not to be Chinese, only to discover during the exposure of the incident that the project team is actually made up of post-00s from within the country.

Of course, this incident also brings us some reflections. Since it is a project run by a group of foreigners, why are they constantly pulling WeChat groups? An all-English official website does not mean an entirely overseas team; it is better to maintain caution when necessary.

The Sin of KOLs?

Collaborate with those KOLs; as long as the money is enough, if not, you can also issue your own tokens to paint a picture. Go2Mars "Crypto Leek Harvesting Guide" Eighth Rule

After this Rug event occurred, many Chinese influencers and KOLs expressed regret—regret for not managing risk properly and not anticipating that the project team would run away…

These are purely excuses. KOLs should bear corresponding responsibilities for the consequences of standing for the project team in exchange for certain benefits.

While the Chinese community is still criticizing KOLs, across the ocean in the United States, a KOL is being sued for using their influence to promote FTX through tweets. At the same time, the EU has passed a law requiring influencers to disclose risks related to cryptocurrencies, moving in the right direction.

Investors should not blindly trust KOLs but should exercise independent judgment, which is a quality every investor should possess. How to improve the management of these influential KOLs is something regulatory agencies should seriously promote.

Conclusion

As an education-themed project, XIRTAM has indeed provided participants with a memorable education in a certain sense. In this season of rampant meme coins, seeing KOLs flaunting their hundredfold or thousandfold returns can easily trigger FOMO emotions.

There is nothing wrong with playing meme coins, but before making any investment, one must conduct their own research and judgment, always remembering one thing:

In the crypto circle, the only person you can trust is yourself.

References: [1] XIRTAM Whitepaper: https://xirtam.gitbook.io/docs/

[2] "Crypto influencer named in FTX lawsuit served via tweet" https://cointelegraph.com/news/crypto-influencer-named-in-ftx-lawsuit-served-via-tweet

[3] "Taking down crypto influencers is one step that would help to heal the market" https://cointelegraph.com/news/more-laws-are-the-solution-for-taking-down-crypto-influencers