PAX-Based Ponzi Scheme Uses 15% of All Ethereum (ETH) Gas, Becomes First Consumer After Tether (USDT)

News
Mon, 05/25/2020 - 14:31
Vladislav Sopov
Some may have thought that the times of huge crypto Ponzis like PlusToken, OneCoin or Quadriga were over. But a new giant has arisen
Cover image via stock.adobe.com
Contents

Recently, a new Ponzi scheme based on cryptocurrency investments has been revealed, which started eating 15% of Ethereum (ETH) network resources.

Old but gold

This Ponzi is styled after the most infamous post-Soviet Ponzi scheme of the 1990s and utilizes the name of legendary Russian fraudster Sergey Mavrodi. 

The ‘crypto edition’ of this notorious scam pledges a monthly income of up to 30% and refuses to recognize itself as a high-risk product. It uses the Paxos Standard (PAX) ERC20-based stablecoin as an investment instrument.

Image by Ethereum Gas Station

At the moment, Ethereum (ETH) resources explorer Eth Gas Station indicates that this scam is the second largest user of gas in the Ethereum (ETH) network. Only the world leading stablecoin USD Tether surpasses it in terms of gas spent.

Image by Etherscan

According to the Gas Tracker by Etherscan, the address of this scheme is responsible for 15.66% of all gas usage in the Ethereum network

Renaissance for Ponzis

Such enormous gas consumption has already resulted in an upsurge of safe minimum gas fees in Ethereum (ETH).

If this scam continues its growth, the Ethereum (ETH) blockchain transactions may get stuck. This may be the first Ethereum (ETH) congestion not caused by NFT game euphoria nor price fluctuations.

The problem of scams abusing blockchain resources isn’t unique to Ethereum. Last November, the EOS blockchain was clogged up by a shady airdrop.

Its smart contract transactions made CPU usage in EOS skyrocket, which resulted in a wide-scale network collapse.

About the author

Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockchain.

Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

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