Mystiko Network has been hit by insider trading allegations by the community following its second airdrop.
Widespread community outrage erupted following the second Mystiko Network (XZK) token airdrop when the community noticed that two addresses received significantly more tokens than most other participants.
Notably, wallet “0xBca” received 59,570 XZK ($1,787), while wallet “oxda8” was airdropped 60,325 XZK tokens ($2,170), according to blockchain data.
Yet, the majority of the other airdrop participants have received between 400 and 5,740 XZK tokens worth up to $172.
Cryptocurrency airdrops have come under scrutiny in 2024 since many of them are riddled with professional airdrop hunters (or squatters) that farm the same airdrop with multiple cryptocurrency wallets with no intention of using the protocol in the long term and market selling the rewards.
The two wallet addresses are core community members, claims Mystiko Network
When asked about the insider trading allegations, Mystiko Discord moderator Ellie said that the claims were “baseless” but refused to elaborate further:
“You can see our public Twitter response. It’s completely baseless and it takes 1 search on the Blockchain to see it’s not true.”
In its public response, Mystiko Network claimed that the two addresses that received substantially more rewards were early protocol contributors, according to a July 25 X post:
“These addresses appear to be aligned with criteria established for early contributors to our ecosystem, with multiple transactions within the network.”
Mystiko also provided onchain evidence of the two wallets’ early interactions with the protocol, but Cointelegraph could not verify whether these wallets belonged to insiders or regular users.
Are crypto airdrops hurting the DeFi ecosystem in the long term?
Cryptocurrency airdrops may hurt decentralized finance (DeFi) protocols and the broader ecosystem in the long term.
This is because many airdrops are filled with squatters who simply market-sell the rewards, creating downward pressure without ever using the protocol after the rewards.
In February, pseudonymous Yearn.finance developer Banteg warned that Starknet’s airdrop eligibility list mainly included airdrop squatters. Approximately 701,544 of the 1.3 million eligible wallet addresses were allegedly linked to repeat or renamed GitHub accounts controlled by airdrop squatters.
In March 2023, it was revealed that airdrop hunters consolidated $3.3 million worth of tokens during the Arbitrum (ARB) airdrop from 1,496 wallets into just two wallets they controlled.