Opportunistic trader front-runs HydraDX’s Balancer LBP contract for $50,000

Polkadot-backed decentralized HydraDX platform raised nearly $ 22.86 million in its second public-only token sale introduced with Balancer’s Liquidity Bootstrapping Pool, or LBP.

However, an opportunistic trader was able to place the bid upfront by exploiting the fact that Balancer LBP contracts are posting in a “non-paused” status by default.

HydraDX is a substrate-based DEX that uses a single ‘comprehensive tool’ to drive the automated market industry on the platform. LBP offered Ethereum-based xHDX tokens that could later be replaced by Hydra’s original HDX token.

LBP is designed to provide a mechanism for crypto projects to make fair launches that seek to address the strategies traders use to exploit DEX’s initial offerings, or IDOs, to gain an advantage over other participants.

Despite trying to ensure fair distribution of the tokens, one participant was able to manage the show anyway and purchase $ 50,000 worth of HDX before the sale officially began.

HydraDX explained on Twitter that Balancer LBP contracts are being posted as “non-paused” by default, allowing the sly trader to Front Nodes before being paused by one block. The team said:

“This accident does not really matter. The price paid can be very high. In LBP, being the first does not necessarily mean getting the best price. On the contrary, since the price is initially dropping, it is expected that without heavy buying pressure Continuing, the price will drop. “

The LBP uses a combination of floating rate, time limit, and constant selling pressure to structure the supply so that the token price drops continuously in the absence of demand. The token sale model also allows issuers to launch a batch while providing a relatively small share of one side of the pairing – like HydraDX’s xHDX token in an HDX / ETH coupling.

LBP ran Hydra for three days, with 87% of its range sold to 5,274 wallets. On Twitter, Hydra noted that the show saw 25% more unique participation from Polkadot’s 2017 ICO contributors.

On February 11th, Jacob Gregaus, co-founder of HydraDX chirp That xHDX / DAI pool has been rated as the largest cluster size on Balancer.

However, Hydra’s suggestion that the price of its token would drop during the show proved incorrect, with HDX steadily rising from an early low of $ 0.034 to close above $ 0.08.

HydraDX LBP price chart: HydraDX

HydraDX stated that all funds raised through LBP will be used to create liquidity for its protocol, indicating that the development of the project will continue to be funded by investors. 15% of HDX’s supply is dedicated to its founders, employees, advisors, and investors.