Massive DeFi scam? Here's how Solana's ecosystem was blown up en masse
Two brothers built a network of DeFi protocols under fake identities.
Two brothers built a network of DeFi protocols under fake identities. Billions of US dollars would have been double-counted.
An enormous network of DeFi logs under fake identities and billions in double-counted US dollars: Solana's ecosystem would be artificially inflated. Coindesk reports this.
The culprits are two brothers named the Macalinaos. They allegedly built 11 protocols on Solana under false identities. Among them are two of the most popular: Saber and Sunny.
Protocols drove Solana's growth
At their peak, these two DeFi protocols accounted for 7.5 of Solana's 10.5 billion US dollars in Total Value Locked (TVL) for Solana's DeFi system. A lot of money was "double-counted" between the two ledgers. The real value was thus artificially inflated. Both projects have now lost 97 percent of their TVLs.
"I came up with a plan to maximize Solana's TVL: I would stack logs on top of each other so a dollar could be counted multiple times," one of the two brothers wrote in a blog post obtained by Coindesk. It was never published, but two sources verify its authenticity.
Saber was an exchange for stablecoins. Sunny was a so-called yield farm. You could earn up to 30 percent interest in exchange for staking tokens.
They marketed their own projects
The Macalinaos created their 11 protocols under pseudonyms. They pretended to be developed by "friends" or "friends of friends." "When an ecosystem is built by just a few people, it doesn’t feel very genuine," one of the brothers explains in his blog post. "I wanted it to look like lots of people were building on top of our protocol, rather than 20+ unrelated programs being steered by one person."
Leveraging the different identities, they promoted each other’s fictional protocols on social media. They touted launches, shared their own Thinkfluencer tweets, and praised each other for inspiring to build further on Solana.
Solana has been in trouble for months
The Macalinaos announced they plan to keep building on Move, the Layer 1 blockchain. Move is run by Aptos Labs, former Meta engineers. Aptos Labs is valued at $1 billion and received $200 million in a funding round led by investors including Andreessen Horowitz, Coinbase Ventures, and FTX.
Solana has struggled for months. The network has crashed several times this year. Critics blame a design flaw. The company behind the blockchain is also facing a class-action lawsuit accusing illegal sale of securities.
Meanwhile, the blockchain still has prominent support: FTX founder Sam Bankman-Fried has called Solana one of the most undervalued projects. He owns an unknown number of SOL coins.
