The Ponzi games are erupting on the Ethereum blockchain


The new hottest apps on ethereum remember a favorite old man: the Ponzi scheme. At least this is the first consensus on FOMO 3D and PoWH3D, two of the first three apps of the platform coming on Tuesday.

According to the DappRadar data site, both games have accumulated 20,000 ethers ($ 9 million) in trade volume over the last 24 hours, a figure that puts them on par with the best decentralized trades and which exceeds the CryptoKitties highs, the most famous viral blockchain decentralized application (dapp) to date.

Perhaps unambiguous for both projects is the way they create an incentive to bring in new people so that users can share the loot while doing so. Both applications collapse even if new users stop joining in a similar way to a basic pyramid scheme.

However, these particular games make it much more complicated (and perhaps more fun).

"At the base, they seem to take the ideas of pay-for-for-for-sale auction models that were popular in 2009-2011, except that instead of selling" real "products for the offer price, they do not sell anything tangible or valuable Real, "Sid Kalla, of the Turing Advisory Group token consulting firm, told CoinDesk.

In penny auctions, people paid a small amount of money to make an offer on a real item. The final winning bidder could get an agreement, but the organization that manages the auction would do many times the price of the item from the commissions collected on the way to that offer.

At least then the auction houses took on some risks: the cost of the item and the operating costs. With these games, there are none (except perhaps incriminations).

Both projects appear to be from the same group, which is called "TeamJUST". The creators remain anonymous. The two products caused a sensation among cryptography enthusiasts, who warn buyers not to support what they claim to be pyramid schemes.

JP Thor, CEO of CanYa, a startup funded with an initial coin offering (ICO), he wrote on Twitter:

"One thing is certain, this thing will not end well."

But financial blogger JP Konig was more philosophical, writing on Twitter"It's human nature to look for game opportunities like Ponzis." Until now the only option has been poorly managed offline Ponzis. "If the relatively clean Ponzis of ethereum replace the bad ones, the world is (a little 39;) better. "

As Konig points out, Ponzi schemes are nothing new about the blockchain. The founder of Dapp Radar Skirmantas Januskas reported PoWH 3D on March 31 with a medium post. "We're honest, this is a pyramid scheme, each user gets paid for users who join later," he wrote.

In an e-mail to CoinDesk, one of the anonymous TeamJUST team members wrote:

"There are many prejudices, it's a game of semantics, and according to some definitions, almost all cryptocurrencies and social security have some properties of a Ponzi."

But what seems to develop now is a sense of traction around the projects. While PoWH 3D has been on the blockchain for a while, it was not until mid-July that it really started on the charts, perhaps partly helped by TeamJUST's follow-up, Fomo3D.

And it could be that the very sketchy nature of the games was part of the charm. Both projects have sites that make their approach light. In many respects, they have a tone similar to the one used in the Ethereum Token in July 2017, the ICO measuring the buyer's contributions on the number of large screen televisions that its creator could buy.

At the moment he has raised about $ 80,000 or 310 ETH, promising nothing.


As evidenced by the rise of these new games, that promise still seems to work.

The "PoWH" in the name PoWH 3D stands for "evidence of weak hands".

Using a token called P3D and a decentralized custom exchange for users to buy and sell it, the creators added some elaborate features to make the idea relatively simple and familiar more fun on a blockchain. Every time someone makes transactions, they apply a 10 percent commission. This commission is then distributed to all those who still hold the token.

So, people who hold P3D get paid when people arrive and get paid when people leave.

It also rewards users for creating affiliate links that attract people and rewards them to stay true over time. Call these functions "staking" and "mining".

As the site says: "Yes, our picketing and mining systems are comic strokes at the overall cryptocurrency, they are also immensely more entertaining and rewarded in (ETH) instead of something that might be worth later ".

And its creators claim that you can not call it a scheme if it's upfront about how everything works:

"We recognize that a contract of smart contracting without trust in this way simply was not possible before this point in the history of computer science.There is nothing intriguing – it's up front, honest and completely transparent."


Fomo3D, launched July 8, is another TeamJUST game that recalls "The Button", an experiment that was launched on Reddit in 2015, which in turn has evoked penny auctions (no money up for grabs).

In the Reddit game, a simple button was accompanied by a 60-second timer. When a user clicks the button, the timer resets. If nobody did, the timer would run out and the game would be over. It took two months and over 1 million clicks before someone let the time run out.

Fomo3D works similarly, except that pressing the metaphorical button costs a little bit of money. At the time of writing there are over 21,400 ethers (almost $ 10 million) on the line. Users of the game buy a "key" and each purchase sets the countdown (currently around 24 hours) of a certain amount.

As the game wiki explains, "Players receive a stream of passive revenue from the game when keys are bought during the round." These prizes can be withdrawn at any time. "

To greatly simplify the way in which this strange game ends, fundamentally: when the countdown runs out, the smart contract "unloads" or pays. The winners depend on which "team" joins a person and – to make it even stranger – part of the winnings can also go to the holders' PoWH 3D token.

In this way, it helps convince users in its first game to stay. And it seems to work: Fomo3D has a lot more transactions in the last day than its predecessor.

Fomo3D consciously evokes the darker corners of the cryptocurrency industry. The user name of the last player for the purchase of a key is sprayed through the site with the warning that they are "scamming the exit", the practice of taking investor funds through a ICO and make it with money rather than building any promised product.

Scam or being scammed

Apart from creativity and humor, most think that the change in tone is not enough to wipe away worries.

"I think people like it as a way to play with some" exciting "rules of the game," Kalla said. "Considering some of the times in which it operates, it would not be surprising to see it run for a while before losing control."

For some critics, blatant references to scams are a bit too radical. The most upvoted comment on a Reddit thread on FoMo3D – "my wife still does not believe me" – is a reference to Ponzi's most famous (recent) scheme, BitConnect.

The joke could be in the players though. Péter Szilágyi, one of the best-known developers of ethereum, has had time to describe an attack that could potentially compromise one of the schemes on Reddit this week. Which raises the question: if the stakes of a game designed to rob its players are stolen, did the thief really do something wrong?

The answer could be the one that the users of dapps will discover soon.

UPDATE (24, July 2018 14:08 UTC): CoinDesk added comments from TeamJUST following the publication.

Image of foam pyramids through Shutterstock

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