Deceptive actors are manipulating pool liquidity, sending token prices soaring by a shocking 22,000%.
80,000 Heist Unveiled: The manipulation of pool liquidity resulted in a swift and calculated theft of $80,000 from unsuspecting token holders.
Check Point Research recently delved into the intricacies of a rug pull orchestrated through a fake token factory.
Check Point's Blockchain Threat Intelligence system raised an alert on pool liquidity manipulation, resulting in a staggering token price increase of 22,000%.
Using the first wallet, they deployed the contract token WIZ and its liquidity pool pair address, which included reserves of WETH and WIZ tokens.
In the second wallet, the scammer created a malicious contract designed to exploit a backdoor and manipulate the WIZ token price, resulting in an $80,000 theft from victims.
Token Creation: The scammer launches a new cryptocurrency token, pairs it with a well-known cryptocurrency on a decentralized exchange, creating a liquidity pool.
Pool Manipulation: After accumulating substantial investments, the scammer manipulates the pool reserve by burning most WIZ tokens, reducing the supply, and temporarily inflating the token's price by 22,000%.
Picture a sizable digital reservoir holding two distinct cryptocurrencies-let us call them Token A and Ethereum.
Now, when an individual decides to exchange Token A for Ethereum, they contribute Token A to the pool and withdraw an equivalent value of Ethereum.
The dynamic pricing within the pool fluctuates based on the quantity of each token present.
If there is an abundance of Token A but a scarcity of Ethereum, the value of Token A decreases while Ethereum's value rises.
In the case at hand, the scammer manipulates the pool balance by burning tokens.
Burning tokens within a liquidity pool, like the WIZ/WETH pool, can boost the token's value by adhering to the core principles of supply and demand.
Liquidity pools follow a formula that harmonizes the quantities of two tokens.
When one token type undergoes reduction through burning, the relative value of the other token in the pool escalates to maintain equilibrium.
The crux of this strategy lies in the transient inflation of the token's price within the liquidity pool.
This blog zeroes in on the former, unraveling the narrative of a scammer concealing a backdoor to manipulate the WIZ/WETH liquidity pool by incinerating their tokens.
The scammer's approach involves temporarily inflating the token price in the liquidity pool.
Scammers leverage backdoors and exploits to manipulate token prices, emphasizing the importance of vigilance in the decentralized finance space.
This Cyber News was published on blog.checkpoint.com. Publication date: Tue, 05 Dec 2023 13:13:05 +0000