Those targeted by LayerZero's "witch hunt": We are the "tools" that create false prosperity on the chain

Author: Mia, ChainCatcher

Editor: Marco, ChainCatcher

In addition to daily airdrop activities, A has been focusing on writing appeal forms recently—his studio's over 200 accounts and more than 100 premium accounts have all been deemed witch accounts by LayerZero.

"In order to increase the chances of a successful appeal, the team used ChatGPT to write the appeals, filling in different reasons for each account and even using different languages. The core idea is 'I am a real user,'" A told ChainCatcher.

Hua also filled out the appeal form as required by LayerZero, declaring that her "airdrop" account is personal and not a witch account of the studio.

Previously, Hua's 20 accounts, which she had worked hard on for half a year, were deemed witch accounts by the project team, making her a target in LayerZero's grand "witch hunt."
"I intended to profit from airdrops, but instead, I ended up losing," Hua said with a bitter smile to ChainCatcher.

As for whether it is effective, both A and Hua stated that they are just doing their part and leaving the rest to fate. "There are too many accounts appealing; how can the project team review them all?"

A report released by LayerZero previously indicated that there are 800,000 addresses that are potential witch accounts. Although the final list has not yet been published, the expected number will not be small.

This "witch hunt" has elevated the game between project teams and "airdrop hunters" to a new level: review, self-reporting, and reporting for rewards. These terms, which run counter to the spirit of crypto freedom, have sparked much controversy.

Once dominant "airdrop hunters" have lost their advantage as the Web3 industry has developed step by step.

Both sides have good reasons: project teams want to distribute tokens to real users rather than studios that sell off their tokens as soon as they launch; studios argue that after investing real money and helping projects improve their data and test performance, they are discarded like trash.

On May 30, LayerZero's "witch hunt" officially came to an end, while Hua and A are still waiting for the verdict.

"Hot Cake" LayerZero

A has been in the crypto space for a long time. When his mining business faced pressure, he switched to the airdrop track.

During the operation of the mining farm, the existing research and technical team, combined with the connections accumulated in the industry, formed a relatively large airdrop studio.

In his view, every large-scale airdrop activity is a long-term value investment, and researching the financing teams behind the projects has also become a focus. The team has concentrated its research efforts on investment projects from well-known institutions like A16Z, Paradigm, and Coinbase, where large financing is standard.

"A high financing amount indicates that the project has a high valuation, and a high valuation often means more valuable airdrop tokens," A explained.

In the early days of the studio, they managed to secure decent airdrop projects like ARB, Aptos, Sui, and Wormhole, achieving good returns in an otherwise bleak market.

LayerZero has two natural advantages: a strong financing team and a high valuation, making it a focal point for A.

In March 2022, LayerZero, aiming to become "the simplest and most lightweight cross-chain information transmission method," completed a $135 million Series A financing round, entering the Web3 unicorn ranks with a valuation of $1 billion, with investments from a16z, Sequoia Capital, and Coinbase Ventures.

In April 2023, LayerZero completed another $120 million Series B financing round, raising its valuation to $3 billion, with traditional capital also joining the investment.
Upon completion of the financing, LayerZero announced that it would consider a "governance token airdrop."

With such strong funding and airdrop expectations, LayerZero appears to be a "feast" ready to be served to "airdrop hunters."

Individual airdrop hunters and studios began to take action, and a flurry of research articles about LayerZero emerged, along with various airdrop tutorial guides circulating in communities.

LayerZero's interaction data also saw explosive growth. Since the announcement of financing in April last year, LayerZero's on-chain interactions began to surge, with daily transaction counts exceeding 200,000. The official cross-chain product Stargate also saw a significant increase in transaction numbers, with daily transactions around 150,000.

A was also busy laying out plans, with the technical team using code to batch generate 200 airdrop wallets and an additional 100 premium accounts, kicking off a long-term airdrop operation lasting over half a year.

A explained that the team would perform designated daily interaction behaviors to ensure that each address could complete interaction tasks to meet airdrop standards while maintaining account isolation.

Rising Costs

In LayerZero's interaction activities, the sunk costs of "airdrop hunting" are accumulating.

Due to high fees and a lack of transparency, LayerZero's cross-chain product Stargate has become known as the "cross-chain assassin" among airdrop hunters. Many users only realized the exorbitant costs when paying GAS fees due to the lack of details in the early stages, and the fees varied across different currencies.

A stated that to participate in LayerZero's airdrop, they had to endure Stargate's high cross-chain fees.

Hua expressed her deep frustration, stating that due to airdrop needs, she once purchased some STG tokens for staking at a unit price of $0.9, but the value of those STG tokens was halved due to the overall market downturn.

When discussing the costs of this airdrop hunt, A mentioned that the cost for each LayerZero account exceeds $200, aiming to obtain around $1,000 in airdrops per account. "To be safe, we also used 100 premium accounts for interactions to ensure we wouldn't be counter-hunted."

Hua noted that this was her first time using multiple accounts for airdrop hunting. Previously, her single account interactions had yielded good airdrop rewards, so she decided to "invest heavily" this time, with total costs around $3,000.

However, when the list of potential witch addresses was released, both A and Hua were stunned; A's studio accounts along with the 100 premium accounts were completely wiped out.

Hua's 20 accounts were also not spared. She humorously remarked, "I intended to profit from airdrops, but instead, I ended up losing."

The Largest "Anti-Witch Action" in History

The complete destruction of their accounts came from LayerZero's witch hunt.

On May 2, LayerZero officially announced that the first snapshot had been completed, stating that the total number of actual users was approximately 5.8 million.

The next day, LayerZero announced that, out of "continued trust in community members," tokens would be distributed to persistent users (rather than witch users). For witch users, LayerZero provided two options: one is "self-reporting," where they can report their witch addresses to retain 15% of the airdrop allocation; the other is to wait for internal screening by the project team, after which they will not receive any tokens.

Additionally, LayerZero stated that the witch detection report would be compiled in collaboration with Chaos Labs and Nansen.

This has made witch monitoring more stringent, and for studios and professional airdrop hunters who have long awaited airdrops and relied on them for survival, it is undoubtedly a wake-up call.
LayerZero even introduced a reporting mechanism, where successful reporters would receive 10% of the tokens from the reported account.

By the end of the first round of self-reporting for witches, an initial determination found 803,000 addresses to be potential witches, with over 338,000 addresses self-reporting as witches. Each qualifying address would receive 15% of its expected token allocation, while the remaining 85% would be returned to qualified users. Compared to 800,000, only less than 40% of addresses chose to "turn themselves in."

The purge is still ongoing. In the following two weeks of "bounty hunting," LayerZero received a total of 3,550 "witch hunt" reports, each containing at least 20 addresses detailing witch operations.

The industry generally believes that the final list will "retain 6.67% - 13.33% of addresses," but most multi-account airdrop hunters and studios have already "fallen" in the first round of purging.

Mutual Destruction and Mutual Love

The game between project teams and airdrop hunters has been evolving.

Hop Protocol pioneered this "encirclement" scheme, targeting studios for screening, focusing on those suspected of manipulating multiple accounts for bulk interactions; using common "witch volume brushing" applications like Merkly, L2 Pass, and L2 Marathon; and conducting cross-chain interactions with minimal amounts.

Under various "self-reporting," "screening," and "reporting" measures, witch screening seems to have become a "cleansing ground" for the encirclement, with studios becoming the lambs to be slaughtered.

However, airdrop studios are not to be underestimated.

After experiencing multiple significant airdrop events, most mature studios now have their own dedicated research teams, technical teams, and interaction teams, and airdrop hunting has gradually evolved from "near-zero-cost reward acquisition" to a professionalized technical endeavor.

In the face of witch scrutiny, studios employ various anti-witch measures, from random interaction scripts and dispersed, independent IP addresses to stricter account isolation.
There is always a layer of game theory between project teams and airdrop hunters regarding "witches" and "anti-witches."

In the eyes of studios like A's, airdrop hunters have made significant contributions to on-chain activity, and airdrop hunting has gradually become an important part of on-chain activity data.

As LayerZero previously announced its airdrop expectations, many project teams release information about airdrops and initiate Odyssey tasks in the early stages to encourage users and studios to engage in on-chain interactions, thus creating a "false prosperity" on-chain.

The generation of large amounts of interaction data allows project teams to optimize and stress-test the project in the early stages while generating business revenue.

For airdrop hunters, this comes with the risk of being "completely unaware of the airdrop rules," providing free testing and on-chain contributions for project teams. As Hua puts it, "The project team enjoys the transaction fees, but we end up with nothing."

In response, fellow LayerZero airdrop hunter and crypto KOL He Bi stated, "The aggressive Odyssey and PUA tactics are all so intense; now that airdrop hunting is over, I'm out."

They self-deprecatingly remarked that in the face of LayerZero's anti-witch mechanism, they have completely become "tools" for creating false prosperity on-chain.

Controversial Reporting Mechanism

In the increasingly competitive airdrop market, the "witch hunt" has gradually turned into a game of human nature.

When discussing why they were targeted for witch scrutiny, both A and Hua pointed their fingers at the "mutual reporting" mechanism.

In their view, despite using multiple accounts for airdrops and considering the witch issue, they also implemented risk controls for premium accounts; however, all their accounts were "wiped out."
In fact, the "mutual reporting" phase lasted from May 18 to 31, meaning this was not one of the reasons.

However, the reporting mechanism that tests human nature has still sparked controversy in the crypto community.

LayerZero announced that it encourages community users to report witch behaviors, with successful reporters receiving 10% of the airdrop share from the reported address.

This undoubtedly plays on the darker side of human nature; to obtain a 10% airdrop reward, one can sacrifice and ignore the achievements of other airdrop hunters.

He Bi stated, "Human nature is inherently evil; every time there's a witch hunt, we can see the dark side of humanity."

Hua also remarked that this is a "mutual destruction" approach. While she can accept LayerZero's strict rules, mutual reporting is undoubtedly a "harmful to both" behavior.

Another studio that did not participate in LayerZero's airdrop also stated that "mutual reporting" is undoubtedly a regressive action, which not only "disgusts" users but also tarnishes the project's reputation.

"Mutual reporting" has become not only a game between project teams and studios but also a struggle between studios and individual users. Since each successful report of an address will return 90% of that account's airdrop tokens to the airdrop pool, this means that the airdrop share for users will increase, and "mutual reporting" seems to be becoming a weapon for ordinary airdrop hunters to promote "airdrop justice."

Rumors have circulated that an employee from a certain airdrop studio chose to resign and report internal accounts; there are even reports of a "hunter" submitting witch reports for 480,000 addresses.

LayerZero co-founder Bryan Pellegrino responded on social media that anyone can write anything they want in a report, but not every report is valid.

This seems to indirectly validate the speculation of "reporting expansion."

LayerZero has successfully leveraged human nature, turning the "witch hunt" into a war between individual airdrop hunters and studios.

Each Side Has Its Position

Today's airdrop track resembles a battlefield.

The phenomenon of witch attacks (Sybil Attacks) has existed since the Web1 era, first proposed by Microsoft Research's John R. Douceur in 2002, originating from the 1973 science fiction novel "Sybil." The on-chain anonymity of Web3 has become an excellent breeding ground for witch attacks, allowing attackers to easily create multiple addresses to obtain multiple airdrop rewards, which they often cash out immediately, significantly impacting projects.

"Anti-witch" has always been the main theme of justice in the airdrop track, protecting the interests of project teams and the vast majority of individual users to some extent.

Studios argue that they have contributed to on-chain activity during interactions.

As Hua puts it, "Everyone is using real money to interact with the project teams."

While individual users are relieved that they are not listed as witches, they also lament LayerZero's harsh and inhumane "anti-witch" rules.

Most studios state that although this is a "Waterloo," every studio has experienced being counter-hunted, and truly professional studios do not mind this small defeat but will look to the broader market.

Some studios and professional players also indicate that airdrop hunting itself carries personal investment risk preferences, and not all studios are optimistic about LayerZero, and they may not consider other airdrop projects in the LayerZero ecosystem in the future.

Additionally, some multi-account players and studios still express that they will wait for the final judgment of fate.

With the end of the airdrop snapshot, LayerZero's on-chain interactions have begun to return to calm. Coupled with user dissatisfaction caused by the aggressive "anti-witch" strategy, LayerZero's on-chain data has hit a new low in a year.

On May 19, the total number of messages that day was only 39,000, a 94% drop from previous highs.