Uniswap Caught in Centralization Controversy: Should Delta.Finance's "Fake Trading" Data Be Excluded?

This article was published on Rhythm BlockBeats.

On March 30, after Delta.Finance was blocked by Uniswap for "non-genuine trading" following a historic peak in daily trading volume (albeit briefly and suspiciously), the matter was far from over.

The developers of Delta.Finance believe that Uniswap did not handle the situation well, and subsequently, someone "replicated" Delta's approach: launching a token named "You don't blacklist delta financial" to continue "disturbing" Uniswap's statistics—this has also placed Uniswap at the center of a controversy over the excessive use of "centralized power."

Trading volume surged by 450%, Uniswap took action

On March 29, Uniswap experienced an abnormal trading volume, surging by 450% within 24 hours. According to Uniswap.info's statistics at the time, the total trading volume reached $7.17 billion, compared to $1.6 billion the previous day. The previous highest single-day record was on October 26, 2020, at $2.19 billion—more than tripling.

This was clearly very abnormal.

Soon, the community discovered that the project causing such massive trading was a token called Delta.Finance (DELTA). Despite having a liquidity pool of only $16.4 million, it generated $6.13 billion in "trading volume," accounting for 85%.

The official team quickly noticed the anomaly. Uniswap founder Hayden Adams commented under a related tweet that it was not wash trading, but also not "real" trading volume. Uniswap.info soon removed the statistics for the project. Additionally, he added that Uniswap is completely decentralized, but Uniswap.info is an analytics site that "tries to explain and display what is happening with the protocol." If it were completely unregulated, it would be useless.

You may recognize the name Delta, but it is neither the recently completed $5 million private placement crypto derivatives trading platform, nor the NFT racing game F1 Delta Time, and certainly not the portfolio investment tool Delta acquired by the renowned eToro. The project causing such a huge stir is Delta.Finance, which is entirely new.

According to the official introduction, Delta.Finance is a new Ethereum DeFi project aimed at eliminating the volatility of options trading by providing sufficient liquidity. To achieve this goal, Delta has set up a mechanism: when tokens move, a token allocation plan is activated, "10% of the total tokens will be sent to users, while the remaining 90% will be locked and linearly unlocked over two weeks."

However, when Delta's liquidity was being reset, Uniswap believed that a large amount of "trading volume" was generated and counted it, but in reality, this was merely an algorithm to increase prices over time to mint tokens. This design resembles wash trading (Note: According to China's Securities Law, wash trading refers to buying and selling to oneself without transferring ownership, affecting the price or trading volume of securities (Article 71, Item 3). It can be simply understood as volume manipulation).

Soon, everyone also discovered that the DELTA token could no longer be queried on Uniswap.

Developers very dissatisfied with the handling results

According to Rhythm BlockBeats, after the Delta team discovered that their project was blocked by Uniswap, a developer "@x3dev" expressed dissatisfaction in a Telegram group. According to him, they believe Delta is not a scam project; rather, the project's mechanism caused some anomalies in Uniswap's statistics.

"It is hard to accept that Uniswap called us a 'scam token' in the comments." He also stated, "There are many scam projects on Uniswap, but Delta is not one of them." "I had previously tried to contact Hayden Adams, but was ignored and have not received a reply."

Developers express dissatisfaction with being blocked by Uniswap in the Telegram group

This Delta incident has sparked intense discussions in the crypto community, such as whether Uniswap's decision to block the project is reasonable, and if not, how to handle the data distortion caused by Delta's mechanism, and whether DEX needs centralized teams for intervention, etc.

Just when everyone thought this matter would gradually settle down, it stirred up waves again.

On March 30, a user claiming to be a project member "0xRevert" tweeted that anyone could create $20 billion in trading volume using specific tokens, "the attack will continue until Delta's trading history is restored, and Uniswap apologizes to us for 'abusing centralized power'." Additionally, he stated he would open-source the code and reveal how to operate it.

Moreover, in response to comments from netizens suggesting that they should be blacklisted, 0xRevert also stated, "Enjoy the whack-a-mole (game)."

A new token named "You don't blacklist delta financial" was also created, which, despite having actual liquidity of less than $1, still generated $10.96 billion in "trading volume."

However, in response to such provocations, Hayden Adams stated that such threats are "one of the dumbest things" he has ever seen. He reiterated that info is an analytics interface, not a decentralized protocol. Violent-related Twitter will not be tracked or counted, but will only show who they are.

In this regard, YFI core developer banteg expressed his opinion, stating that he agrees that Delta's emergence makes info seem less useful, and observed that this phenomenon is quite interesting. "(Hayden Adams), you might need some heuristic stuff." To this, Hayden Adams replied that the team is trying to explore but still needs improvement, "Long-term token listings need to exclude trading volume; this may be the only viable solution."

Insights

At least for now, the Delta project team did not maliciously disrupt data, and the human intervention by Uniswap.info does not violate the decentralized spirit of blockchain.

It is just that the mechanism designed by the Delta project caused anomalies in data statistics—something that had never happened before. In response to such an unexpected situation, the official attempted to quell (cover up?) the anomaly by blocking it, but did not expect that the project team could not accept such a handling method, leading to intensified conflicts between the two parties, evolving into the current situation.

If Uniswap had negotiated and adjusted with the Delta project team before resolving the issue, rather than directly blocking it in an arbitrary official manner, perhaps such twists and turns would not have occurred.

In the DeFi world, various unexpected events can happen at any time, posing a significant test for all entities in the ecosystem. In this storm, Uniswap does not seem to be the winner; what about Delta, which was blacklisted?