Defi Kingdoms (JEWEL) is down nearly 40% today. What in the world happened? Covered: DeFi Kingdoms Hit Hard By Controversy A Slow Rug? DeFi Kingdoms Hit Hard By Controversy At the end of a tumultuous week where the market has been doubled over puking, a saga is unraveling within the Defi Kingdoms empire. The market […] The post DeFi Kingdoms Crumbles as Scandal Unfolds appeared first on CryptosRus.

DeFi Kingdoms Crumbles as Scandal Unfolds

Defi Kingdoms (JEWEL) is down nearly 40% today. What in the world happened?

Covered:

  • DeFi Kingdoms Hit Hard By Controversy
  • A Slow Rug?

DeFi Kingdoms Hit Hard By Controversy

At the end of a tumultuous week where the market has been doubled over puking, a saga is unraveling within the Defi Kingdoms empire. The market sickness has thus doubly increased in the $JEWEL token. In the last seven days, $JEWEL has plummeted from $3.70 to $1.25. Just today, it is down nearly 40%. What caused the dump today stems from massive controversy regarding the Devs and members of the DFK team. The situation and details therein is ongoing.

Accusations of corruption and malfeasance of some DFK team members has been spreading online, causing many to pull their liquidity and sell their positions. There was a coordinated effort to hide a mass pump-and-dump operation within the team. The supply of Jewel was “pre-mined”, which is just to mint the supply at the creation of a token. Two million JEWEL tokens in question were pre-mined specifically for the purposes of providing liquidity to bootstrap the ecosystem. The documents from the launch of DFK claimed these two million coins “would not be withdrawn or sold.”

However, these tokens were actually used to facilitate an exploit to dump ill-gotten JEWEL on the market. In an effort to hide this from being snuffed out, the DFK team posted a fake address which was supposed to be tied to these coins. When honestly done, this is an effort to provide transparency, allowing people to see the movements of these coins on the blockchain-explorer. In reality, the team actually had been dumping “millions” of JEWEL through leveraging the two million tokens, rather than using them to provide liquidity.

Apparently, the Harmony explorer is very hard to use, so tracking the wallet hadn’t been done until now. From what can be gathered, the team knew about this “exploit” and the fake address, but did nothing to stop it. In short, this “person” use their ill-gotten JEWEL tokens to dump ill-gotten JEWEL rewards on the market, tanking price and cashing in millions. Further, a recent exploit that allows players to mine locked JEWEL from multiple accounts seems to be another wrinkle in this manipulation.

“A Slow Rug”

It is unclear the fate of the two million JEWEL tokens themselves. As touched on above, the person behind the exploit drained money from the protocol through the use of “garden rewards”. This slow-rug in this context would be an “unlock exploit”, which in this case “impacts the speed at which players can unlock their locked JEWEL.” A patch for this exploit is supposed to go live today, but all confidence has been shattered in the protocol. The blowback on the discord server is being reported as a total nightmare.

JEWEL and Defi Kingdoms had already been suffering before this. The massive amount of JEWEL rewards given to players has drastically increased sell pressure “without an influx of new players to balance the game’s economy.” In the last month, Defi Kingdoms active players fell from 30,000 on Mar. 31 to approximately 15,000 today. Printing (minting) more tokens led to a falling price. Even as users stopped playing, the minting of new tokens (rewards) couldn’t be curtailed, as that is the incentive driver for liquidity provision.

The man behind Defi Kingdoms, @FriskyFoxDK on Twitter, has released a statement, published on the Defi Kingdoms Twitter account. In the statement, he claims no responsibility for anything, other than seemingly the fake address. He claims the person behind the exploit was an initial investor and “friend” who put down 15K for the two million tokens. As seen below, this person has apparently walked away with ~$4 million dollars from his insider skullduggery. A vote is taking place to decide the fate of ‘Frisky Fox’, and there is no doubt he will be ousted.

All of this stinks to high heaven of course, and seems like quite the convenient situation to exit. This ‘friend’ provided the initial liquidity then morphed into a player to sell millions of dollars in JEWEL. He claims there was a “contingency”, which apparently means some verbal agreement, “never to withdraw the JEWEL <> ONE liquidity.” Having this amount of unilateral control over such a massive protocol is wholly contradictory to what crypto is supposed to be.

Cutting deals for friends and turning a blind eye to manipulation is something that can permanently harm the crypto community. These LP tokens used to manipulate the farming of new JEWEL should’ve been burned. Instead, this person was cashing out. All signs point to this person being a proxy/trojan horse to bilk the protocol without detection. “Excuse my friend, he wasn’t crypto savvy.” My kingdom, my kingdom for a friend.

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