The decentralized platform PancakeSwap has established itself as a key player in the BNB Chain. This position allows it to hold trading competitions in association with Binance, but the latest such operation has faced widespread criticism over the selection of its winners.
PancakeSwap: a trading competition that went off the rails
Launched in 2020 as an Ethereum killer, the Binance Smart Chain (BSC) was an instant hit due to its direct link to the Binance cryptocurrency exchange platform. However, this leading blockchain, largely dedicated to decentralized finance (DeFi), changed its name a few years later to BNB Chain. The reason: to anticipate and calm the numerous regulatory proceedings initiated against Binance at that time.
Within this ecosystem, the decentralized exchange (DEX) PancakeSwap quickly rose to prominence, to the point of overshadowing the previously undisputed leader Ethereum, the famous Uniswap. This provided an opportunity to organize trading competitions in order to increase its popularity along with its trading volumes.
The latest such operation took place from July 7 to August 5, with a prize pool of $250,000 to be shared among the winners. On the agenda: trading in five cryptocurrencies linked to sponsors of the Binance Alpha program: League of Traders (LOT), Bedrock DAO (BR), MilkyWay (MILK), NodeOps (NODE), and Moonveil (MORE).
“Manually selected” winners?
Everything seemed to have gone smoothly, with a total of 1,700 winners validated. Then, doubts arose when a more thorough analysis of the addresses involved revealed strange links between more than half of them.
The results of this investigation highlight a minimum of 850 portfolios selected as winners, whose activity suggests that they may have fed other portfolios… also winners, by transferring BNB to each other. The aim: to validate the various stages of the competition using a wash trading procedure.
Seeing so many interconnected portfolios win this competition is so unlikely that it raises questions about the participation of insiders whose victory is more a matter of deliberate selection. In any case, the rewards were not distributed fairly, according to a representative of League of Traders:
The portfolios appear to be directly connected to each other. The probability of this happening several times in a row seems close to zero. The [prizes] were not distributed fairly among the participants.
The dissatisfaction of the League of Traders representative is understandable, considering that this project—like the four others selected—contributed $50,000 to the prize pool for this trading competition, for a total of $250,000, most of which was distributed in a questionable manner.
Meanwhile, PancakeSwap officials have yet to make an official comment.
