The largest witch hunt in history comes to an end: LayerZero's fancy anti-witch strategy plays out the prisoner's dilemma

Written by: Nancy, PANews

On May 30, the LayerZero witch hunt event, which lasted for several weeks, officially came to an end. Although witch hunts have become a routine part of airdrops for major projects, LayerZero's elaborate anti-witch activities played out like a crypto version of the "Prisoner's Dilemma."

In the story of the "Prisoner's Dilemma," two suspects are interrogated in separate rooms after committing a crime. Due to a lack of sufficient evidence, the police offer several choices: if both refuse to confess, they will each serve 3 years due to insufficient evidence; if both confess, they will each serve 5 years; if one confesses while the other refuses, the confessor will serve 2 years, and the refuser will serve 7 years.

Today, this classic case of game theory is a true reflection of the LayerZero airdrop event. As a highly valued leading project, LayerZero naturally became a key target for many users. However, before the community could anticipate the "big rewards," they were met with stringent anti-witch scrutiny.

Anti-Witch Internal Competition: From Confession to Mutual Reporting

At the beginning of this month, LayerZero announced a 14-day self-reporting plan for witches. In return, users who self-reported would receive 15% of their expected allocation, but this list would not be made public. Those identified by LayerZero as witch users who did not self-report would not receive any token allocation.

To appease users and demonstrate fairness, LayerZero later stated that "self-reporting" was not aimed at individual users but rather at large witches, and LayerZero employees were prohibited from participating in the airdrop claims, with violators facing termination.

The self-reporting initiative saw significant participation from LayerZero users. For many multi-account users/studios, it seemed better to confess and retain some benefits rather than be identified by LayerZero later and receive nothing. According to data released by LayerZero Labs, over 338,000 addresses self-reported during the witch self-reporting phase, with more than 803,000 addresses initially identified as potential witches. Each qualifying address would receive 15% of its expected token allocation, while the remaining 85% would be returned to qualified users.

However, self-reporting was just the "appetizer" for LayerZero's anti-witch efforts; the "bounty reporting" made this cleansing activity even more competitive.

From May 18 to May 31, it was LayerZero's bounty hunting period. According to the relevant submission page of LayerZero, a total of 3,550 reports were submitted.

However, this hunting activity faced many twists and turns, turning into a test of human nature. According to the rules of LayerZero's witch hunting bounty activity, reporters needed to provide at least 20 addresses detailing witch operations. Successful bounty hunters would receive 10% of the witch's expected token allocation, while the remaining 90% would be returned to qualified addresses. However, if the tokens that the witch address was originally supposed to receive were 0, then the bounty hunter would also receive 0. In cases of reporting the same address, the bounty would be awarded to the first reporter. To avoid "friendly fire," LayerZero allowed addresses mistakenly reported as witches to appeal by filling out a form.

Once the activity began, it quickly garnered numerous community reports. LayerZero CEO Bryan Pellegrino previously revealed that within a few hours of the bounty activity starting, over 3,000 witch reports and 30,000 appeals were received. Additionally, due to a large amount of spam, many GitHub accounts were banned, prompting LayerZero to announce a suspension of the witch hunting bounty activity two days after it began. Pellegrino stated that a deposit mechanism would be introduced, requiring reporters to stake 0.02 ETH to submit a report.

On May 28, LayerZero Labs announced the reopening of witch bounty report submissions, raising the deposit to 0.5 ETH, with the activity set to end in 48 hours (8:00 AM Beijing time on May 30). This meant that only addresses providing a deposit would be eligible to submit reports, and the deposit would be refunded after the TGE for honest submissions or successful reports. If reports involved stealing others' work, any form of fraud, lack of methodology, spam, etc., the deposit would not be refunded and would be destroyed. According to Ethereum blockchain data, LayerZero received over 240 ETH within two days of restarting the activity, amounting to approximately 480 reports.

Driven by economic interests, various reporting dramas continued to unfold. For example, employees from yield farming studios chose to resign and report internal accounts, addresses of major airdrop participants were reported, and users targeted clusters of witches among major accounts/yield farming KOLs for mass reporting. There were even rumors in the market that the security agency Trusta submitted 470,000 suspected witch addresses to LayerZero at once, which the agency denied, stating it would never report any addresses.

Image source: Community

However, this reporting mechanism also led to many users being "collateral damage." Bryan Pellegrino responded that anyone could include anything they wanted in their reports, but not every report was valid, and the standard for "conclusive" evidence was very difficult to meet.

The analysis of the "LayerZero Witch Reporting Report" published by @vga.eth pointed out several key points, including that the official analysis of witches focused on: 1. Clusters with ten, hundred, or thousand addresses interacting, showing clear traces of fund transfers, such as one-to-many transfers and many-to-one consolidations; 2. To increase interactions on one chain, cross-chain amounts of $0.01 or less; 3. A large number of worthless NFTs minted to increase cross-chain interactions, with a small amount being acceptable; 4. Using popular witch interaction programs, such as L2 Pass, etc. Meanwhile, witch hunters' reports had the following key points: 1. Transactions in the same cross-chain direction; 2. Addresses with consistent contract calls; 3. All contract interaction habits and sequences are consistent, usually withdrawing through the same centralized exchange account, with similar amounts and times; 4. Minimal mainnet interaction and low EVM full-chain balance (less than $200).

Currently, the final list of witches is yet to be determined and will be officially announced after LayerZero's review. However, according to Bryan Pellegrino's previous statements, it is expected that only 6.67%-13.33% of the 6 million addresses will qualify for the airdrop, and he recently responded to user inquiries, stating, "90%-95% of the reports must be valid, even more, and of course, bad reports are quickly 'discarded.' Nothing is perfect."

With the witch hunt coming to a close, users participating in LayerZero are awaiting a "judgment of fate."