Ethereum blockchain data shows a user lost over $135,000 worth of ether trying to purchase Fees.wtf tokens (WTF) soon after an airdrop on Thursday night.
Data shows the user accidentally swapped 42 ether for 0.00004 WTF. However, this amount of WTF was worth just $0.00000525172 at the time of writing, as per data from CoinGecko.
The slippage was caused due to low liquidity in the trading pool, causing some in crypto circles to criticize how Fees.wtf developers funded the initial pool.
Fees.wtf is a popular tool that allows users to track the fees they spend on Ethereum. It airdropped its WTF tokens on Thursday, jumping on the larger trend of crypto projects distributing tokens to user wallets based on their usage with those protocols instead of listing directly on the market.
Use cases include staking WTF or its liquidity pool tokens with annualized returns of up to 7,000% as of the time of this writing. Users are further eligible to receive a non-fungible token (NFT), which Fees.wtf says is unique to each individual wallet.
Speculators jumped into accumulating WTF soon after its listing on Ethereum-based exchange Uniswap, hoping that an eventual price rise would net them handsome returns. But the low amount of initial liquidity on Uniswap lead to tears instead of glory.
A liquidity pool imbalance caused one user to lose 42 ether. (Etherscan)
Liquidity pools on decentralized exchanges (DEX) like Uniswap are unlike how traditional exchanges operate. A pool refers to a set of two tokens provided by users to a DEX, which then uses smart contracts to match trades and automatically increase or reduce prices at which the two tokens trade with each other.
That’s where the problem lay. Blockchain data shows Fees.wtf developers seeded the initial pool on Uniswap with over 2,211 WTF and 0.000001 ether, causing a huge imbalance in the trading pool. This allowed users to sell low amounts of WTF for relatively high amounts of ether, while buyers of WTF ended up purchasing the tokens at a much higher value.
Purchasing WTF after the airdrop could have been a bad bet in hindsight. The token’s prices fell more than 60% in the past seven hours, data shows, falling from an initial $0.28 to as low as $0.09 in Asian hours on Friday.