Here’s How Insiders Dump Blockchain Gaming Tokens Using Sybil Attacks

The blockchain gaming industry had an impressive 2021. Play-to-earn, move-to-earn, NFT games and the prices of all kinds of blockchain entertainment rose.

Newspapers ran glowing stories about blockchain games like Axie Infinity employing 60,000 Filipinos. Of course, it was all just a flash in the pan. Within a few months, the bottom fell out of the market and both active users and market capitalization cratered.

The boring scheme of gaming operators paying for players only worked as long as the operators could sell their crypto tokens based on inflated metrics like daily active users.

Unfortunately, they soon found out that it is no sustainable business in paying populations to play video games. Once insiders finished dumping their bags, the blockchain gaming industry left many of these Filipinos in debt.

Now that much of the dust has settled, a new report from Delphi Digital examines the extent to which so-called Sybil attacks inflated growth metrics for blockchain games.

What is a Sybil attack?

A Sybil attack occurs when someone tricks a reputation system by creating multiple identities. The simplest example of a Sybil attack is creating fake identities to discredit a competitor and make it look like they have terrible service.

The name of the attack comes from the psychological book, Sybil, which is about dissociative identity disorder.

Various blockchains use defenses against Sybil attacks.

Bitcoin’s proven method prevents Sybil attacks by imposing a cost on spam transactions. Not only is it computationally expensive and energy intensive to hash valid blocks of transactions, but users also have to pay a fee for each transaction.

Also, all Bitcoin mining pools and node operators can lose their reputation within 10 minutes if they do not stay in consensus when broadcasting and validating blocks. With a reputation that is expensive to build and easy to lose, Bitcoin is an example of a Sybil-resistant network.

Unlike, Sybil attacks are a fantastic way to goose move calculations in blockchain games.

Sybil attacks temporarily improve morale

For many Metamask-based games, creating new wallets is free, and performing many in-game actions is free. The back player of a blockchain game can easily create the illusion of increasing user engagement.

Although there are few reasons to create artificial activity in conventional video games, non-conventional blockchain games almost always have a token or NFT that trades on emotions like fear and greed.

• Sybil attackers can increase the number of unique wallets that interact with a game.
• These attackers may also qualify for engagement thresholds, snapping up NFTs, airdrops and other rewards.
• Sybil attackers can also deform blockchain data such as throughput, transaction popularity, node distribution, validation norms, and even Layer 2 commitment. According to the axiom “garbage in, garbage out”, misleading on-chain data leads to misleading intelligence, reports and investor decisions.
• In addition to discouraging legitimate use, these Sybil attacks can artificially pump GameFi tokens.

Throughout GameFi’s short history, Sybil attackers have significantly increased the number of unique active wallets using the largest blockchain games. This is always evident during NFT drops where unique active wallets do not equal the number of human users.

Of course, even legitimate users can have two or three wallets. After all, many people have multiple Instagram or Twitter accounts. Still, the vast majority of on-chain blockchain gaming activity is bots and Sybil attacks.

Read More: Play to Earn Crypto Bubble Has Popped – Axie Infinity Leads, Down 99% from ATH

Conclusion

Bot activity discourages legitimate users of blockchain games who believe the marketing materials of game promoters. It also distorts the metrics that most people make investment decisions on: Daily active users, traction, growth rates and other chain data.

Most blockchain games have free and ultra-low-cost actions, such as registering with a new blockchain wallet, which gives Sybil attackers an unfair advantage. This marginalizes legitimate users who often choose other, more enjoyable games with real people.

GameFi protocols with lower costs see more bot activity. Many actions are completely free. Often, repetitive actions like gold grinding in blockchain games are easily programmable. Developers can create simple software and complete actions over and over again.

Sybil attack distorts GameFi. Almost all blockchain games – especially games associated with NFTs or high-value tokens – have poor Sybil resistance. Unfortunately, Sybil attacks have been a feature, not a bug, in the blockchain gaming industry.

After all, the point has usually been to make money selling crypto assets. Once the money is earned, the game is much less fun.

For more informed news, follow us further Twitter and Google News or subscribe to our YouTube channell.