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Fake Uniswap Volume Caused DeFi and DEX to Clash

‘Fake’ Uniswap volume causes DeFi Project and DEX to clash.

A day right after helping Uniswap set a new, admitting short-lived and dubious, record for daily transaction volume, Delta.financial has done it once again – to the chagrin of Uniswap, one of the largest decentralized exchanges in the world.

Delta is a DeFi protocol for removing volatility from options trading by stabilizing liquidity. One anonymous developer with the CORE team, which has built Delta, had released a smart contract that has allowed around $11 billion in trading volume for a single token to be registered over the past 24 hours on Uniswap. That will be a new record, although it is unlikely it will stand; Uniswap Info, an analytics site, had invalidated Delta volume yesterday.

The developer’s move threatens to render the Uniswap statistics meaningless in an industry where transparency is a currency, all over a likely manufactured debate over decentralization.

DeFi refers to the decentralized finance protocols that have allowed the people to trade the assets, earn interest, borrow funds, and make bets without a bank, broker, or bookie. Uniswap is one of the largest decentralized exchanges in the world, with over $4 billion in value that was locked into the protocol in the form of the tradable cryptocurrencies. It allows the people to swap assets with other people directly without placing their tokens in the custody of a third party, like the centralized crypto exchanges Coinbase and Binance.

Until two days ago, when Delta launched on the Ethereum blockchain, Uniswap had never done more than $2.22 billion in a day, last October 26,2020, when Harvest Finance was hacked using flash loans from Uniswap. And then yesterday, it did $7.17 billion, with $6.13 billion coming from the DELTA token. However, Uniswap Info, which tracks statistics for the DEX, moved DELTA volume to untracked, meaning it would no longer count toward its global volume statistics. The adjusted tally from yesterday is about $1.26 billion.

The reason for the adjustment has to do with Delta’s liquidity rebasing system. The algorithm that helped Delta token mining become more expensive over time interacts directly with Uniswap’s liquidity pool, making it look as though lots of trading occurs.

Hayden Adams, Uniswap’s creator stated that the result is “not wash trading but not ‘real’ volume either.”

The move to filter out Delta trading caused a self-identified developer at CORE, the anonymous project behind Delta, to hack the system and will allow anybody to meddle with Uniswap.info’s stats.

“Everyone can now create $20b volume on a custom token!” tweeted 0xRevert today as Uniswap trading volume boomed past the $10 billion mark.

“Attack will continue until DELTA trading history is reinstated, and we get a [sic] apology from uniswap for abusing centralized power.”

Now, a token called “You don’t blacklist delta.financial” and had labelled an “Ian Laphan fan token” accounts for $10.96 billion in trading volume despite having less than a cent in actual liquidity. Ian Laphan could be a sarcastic reference to Uniswap engineer Ian Laphan.

0xRevert then stated that he will open source the contract, allowing others to “create billions of liquidity in stat aggregators.”

Adams named 0xRevert’s threat “one of the dumbest things I’ve ever seen” and then defended Uniswap.info’s approach.

“Info has always filtered out fake volumes,” he added through a tweet. “Its [sic] an analytics interface not a decentralized protocol.”

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