In order to make the TotemFi token launch on April 6th as equitable as possible for our community, we’re partnering with Ferrum Network’s Fair Launch Protection System.
This partnership should curtail an increasingly prevalent problem facing Uniswap token launches; the use of trading bots. Token launches can be manipulated by bad actors who, using unfair technological advantages, buy large amounts of tokens before any real community members can, and then after a few minutes, dump those tokens on the real community members and investors. Using this pump and dump scheme, bot owners can earn millions of dollars in just a couple of minutes, at the expensive of the community.
TotemFi will be implementing the Fair Launch Protection System, powered by Ferrum Network, meaning that bot addresses who attempt to infiltrate our listing will be detected and blacklisted, and will not be able to sell/transfer any tokens.
The problem with bots
Below follows some information about the issues bots present to token launches:
- Bots regularly infiltrate Uniswap listings of hot projects and bot owners can make hundreds of thousands of dollars in minutes at the expense of the community.
- Most bots will start dumping within minutes and can dump in the same block as they bought.
- Bot owners will sell at inflated prices to other users after their bots have bought up liquidity and driven up the price.
- In some recent listings, bot owners made millions of dollars within minutes by pumping and dumping on the community.
How do bots work?
Essentially, the bots take advantage of the speed at which they are designed to operate and are able to buy tokens faster than anyone else. This of course would not be an issue but for the fact they always immediately dump their tokens on the community.
Ethereum block time is ~13 seconds. Because of the long block time, programs can monitor the mempool for unconfirmed transactions. When an Add Liquidity pending transaction is observed in the mempool for a monitored token, the user’s program can execute a buy order in the same block.
This means that bots are always faster than your real community and will buy at the lowest possible price and then dump it on your real supporters.
Stopping the Bots with Ferrum’s Launch Protection System
We are proud to be working with Ferrum to utilize their Launch Protection System. There are multiple phases to their anti-bot system, including:
- Firstly, Ferrum Network’s dev team gathers intelligence on known bot activities from various sources.
- Secondly, they identify key indicators that differentiate humans and bots
- Then, for the launch, Ferrum Network implements several strategies to prevent bots from dumping their unfair purchases onto the community, including a blanket restriction on selling that will last roughly 15 minutes while the anti-bot protection system in implemented
Advantages of the Ferrum Launch Protection System
There are many advantages to the Launch Protection System including:
- Increases trust in the launched token as the community doesn’t need to worry about being dumped on by bots.
- Tokens bought by bots are effectively removed from circulation, therefore permanently lowering the total supply.
- ETH is added to the liquidity, benefiting the community and project
- Increases the price floor because tokens bought by bots cannot be dumped
Implementing a Review Period
Although we are extremely confident in our ability to detect and blacklist only bots (we had a 100% success rate in our previous launch), we understand there might be some instances where it is a grey area or we accidentally blacklist a real community member.
To be clear, in the event of a questionable/grey area, we will NOT blacklist that address. We will only blacklist an address when the evidence of botting is clear and obvious.
Secondly, we will implement a review period wherein anyone who believes they were wrongfully blacklisted can contact the dev team and we will review what happened. If we made a mistake, we will un-blacklist the address.
About Ferrum Network
Ferrum Network, designed by a distributed systems expert with over ten years experience at the world’s biggest tech companies, was built to address two fundamental problems impeding the mainstream adoption of cryptocurrencies: slow transaction speeds and the lack of interoperability between networks.
We hope you found this useful!
Please do get in touch with any ideas or feedback, as we will always be looking to work with the community to better the project.
Thanks for reading,