$118 000 USD

SEPTEMBER 2020

GLOBAL

HOT DOG

DESCRIPTION OF EVENTS

"HotdogSwap was launched on September 2." "The newly cloned DeFi protocol called Hotdog promised insane returns up to one million percent APY in order to lure liquidity providers. It is yet another doppelganger of the popular token swap and liquidity platform Uniswap, and follows in the footsteps of the recently launched Sushi and Kimchi platforms." "Similar to Sushi, Hotdog allowed liquidity providers to deposit Uniswap liquidity pool tokens to earn HOTDOG tokens which would entitle users to continue to earn a portion of the protocol's fee, accumulated in the token, even if liquidity provision was withdrawn."

 

"In the two years since its launch, Uniswap has solidified its position as one of the mainstays in DeFi. Along with that, their protocol design has become a standard in and of itself, one in which many projects have come to derive its mechanics from. With that, we have designed HOTDOGSWAP as the next step forward in the Uniswap protocol design: an evolution. Taking Uniswap's elegant core design, we've added community-oriented features that we believe help improve the design of the protocol, as well as provide further benefits to the actors involved."

 

"DeFi traders that flock to these new insanely high yield offering projects are known as degenerate farmers or ‘degens’. They drive token prices up initially which also pushes up the yields. Cashing out quickly, as appears to have been the case with Hotdog, nets a big profit for a few while the rest get burnt. Many compare the projects to ponzi schemes, or pump and dumps."

 

"The HotdogSwap is a new DeFi project that only existed from September 2." "The data from Uniswap.info, the analytics dashboard of the leading DEX, pointed out that Hotdog token skyrocketed to over $5,000 in price." "$4000 to $1 in 5 minutes." "HotdogSwap has seen its token nosedive in a matter of five minutes."

 

"They create a market for the token on Uniswap —anyone can list any token on this permissionless DEX, by providing the token and ETH. By controlling the supply of ETH relative to the token, they’re also able to set an inflated price for a highly illiquid token."

 

"HOTDOG tokens skyrocketed to as high as $6,000 in just a few hours, according to charts on Uniswap.info. It appears that the early adopters then sold off after the dump, which induced an epic dump smashing the token back to a dollar in just an hour." "Currently, the token is valued at $0.0176 according to Uniswap."

The Hot Dog price was heavily inflated and then dropped within hours.

 

The exchange appears to be down now, though Twitter and Telegram remain.

HOW COULD THIS HAVE BEEN PREVENTED?

As far as we can tell, no assets were lost in the platform. The issue was primarily that investors were paying exorbitant prices for what most regulators would consider to be a security, since the token value essentially depended on the efforts of the particular (though in this case anonymous) individual(s) running this platform.

 

Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

Get Social

  • email
  • reddit
  • telegram
  • Twitter

© 2021 Quadriga Initiative. Your use of this site/service accepts the Terms of Use and Privacy Policy. This site is not associated with Ernst & Young, Miller Thompson, or the Official Committee of Affected Users. Hosted in Canada by HosterBox.