Throwing the Community Under the Bus: When a team won't take responsibility and instead blames the community.
I’ve been a long time player of Splinterlands, a blockchain game on Hive. The team recently started a new venture, Genesis League Sports. Currently, the project is in its early stages. The token is being airdropped and distributed through staking, and packs are available for presale, but cannot yet be opened. Things had been going slowly, but smoothly, up until recently.
A Liquidity Crisis
Unfortunately, recent issues have arisen with the project. Recently, a group decided to work together to purchase a large amount of packs, to take advantage of a presale deal offered by the team. In the process, the core token for the ecosystem, GLX, experienced a significant price pump. Unfortunately this pump was not sustained, and community members have argued that the whole event was an act of collusion that drained value from the economy.
While one team member, Yabapmatt, did make a statement which suggests some level of responsibility, at the end of the day, the team called the event a “pure exploit,” passing the blame on to those who made the decision to work together to take advantage of the deal.
Violating Trust
There are cases where there is an expectation of how a system is to be used, and even though it could be used in a different way to one’s own benefit, doing so would be a violation of trust. For instance, there has been abuse of testnet faucets, where individuals have tried to leverage the system to generate actual capital returns from testnet tokens. In that case, the whole reason for the testnet, and the testnet faucets, would be to provide developers with some tokens to use to test their software. Abusing it for profit would be a violation of trust.
The idea that code is law, and that anything is okay to do so long as the code allows it, is common sentiment in the crypto space. It’s nonsense. We are legally allowed to do many things that are quite immoral and shouldn’t be done. Legal and ethical are not the same thing. Likewise, even if “code is law,” legal and ethical are not the same thing.
However, in this case, the team specifically created the deal. They made the deal part of the very core of the project, and utilizing a deal that is offered is in no way exploitation or a violation of trust. Taking a deal that is offered by the team that created the project, is almost certainly ethical. Could they have waited until liquidity was better? Yes, but they were not ethically obligated to wait until conditions improved, especially because there was no indication by the team that they would work to improve those conditions.
Information Asymmetry
An additional point that I want to add into this discussion, since it was brought up as a question by another community member. There was assertion of collusion and manipulation. However, working together is not collusion. Asserting otherwise would place every mutual fund as a form of collusion, and basically any team project as such as well. Wrongdoing in this kind of matter is determined by information asymmetry.
Collusion and manipulation take advantage of having information that other individuals do not have, and using that information to profit at other peoples' expense. In this case, blockchain technology made the transactions immediately public, and the deals in question were all publicly stated as options that were available to anyone who had sufficient funds. There was essentially no information asymmetry.
Moving Forward
It is going to take a long time for the team to build trust again. A team that throws its whales under the bus, not to protect the broader community, but rather to protect themselves from admission of blame, is not a team to be trusted.
Going forward, the team will have to at least ensure that this kind of event doesn’t happen again, by actually doing what they should have done over a month ago: improve the liquidity situation. The major issue is that the token is limited to the Hive ecosystem right now. There isn’t nearly as much user activity, as a whole, on Hive.
Splinterlands tackled this issue by having a bridge between Hive and Binance Smart Chain. This bridge allowed DEC and SPS holders to supply liquidity and trade larger volumes through DEXs like Pancakeswap. The team also helped promote initial liquidity pools on the platform.
It was expected that a similar bridge and liquidity environment would quickly be available for GLX and other GLS assets. But so far no bridge has been introduced. It’s quite odd, as it should be a fairly straight forward copy and paste of code, for the most part. Whatever the delay is, even if the team does not admit their mistakes explicitly, they need to at least correct them. Then maybe some trust can be reestablished.
Originally posted on the BCU Times Blog.
Posts like this make me just want to completely stop building things. Yes, the incident was 100% an exploit, by definition - i.e. "taking advantage of a flaw in a system". The fact that it was an exploit does not in any way imply blame. The flaw was clearly the team's fault - mostly my fault, in this case.
The flaw also was much less a result of low liquidity as it was the result of too short of an average time period for the price feed. Additionally, creating bridges to more chains does not create more liquidity. There could have been bridges to 100 different chains but that doesn't mean that anyone would have added liquidity on those. Either way, I am sorry that the team is not working fast enough for you.
Despite that there was a flaw, it is in no way "throwing whales under the bus" by saying that we are disappointed that certain people chose to exploit the flaw rather than work with us to address it.
Really? We've only been taking crap like this from people like you for nearly 5 years now while doing everything we can to build awesome products and increase the value and utility of player assets and now it will "take a long time for us to build trust again" because there was a flaw in the system very early on that will have a nearly insignificant effect on anyone in the community in the long run?
If that's how you feel I have no idea why you haven't sold all of your assets and moved on already.
Oh Matt. I gave you too much credit when I suggested that you admitted at least some fault. Your use of the term "exploit" makes it meaningless. By your construction of "exploit" everyone who earns from staking is exploiting the system.
The flaw in the system was that you and the team did not provide enough liquidity to satisfy the deals that you yourselves offered to the community.
That too. So you're really just admitting yet another flaw that you yourselves created in the system, which made it difficult to actually enjoy a deal that was offered by your team, without it causing damage to the ecosystem.
Damn, buddy. I've been quite supportive of your projects for years. I've given constructive criticism, as I am doing here. I didn't say "you're idiots and you fail." I criticized your bad behavior and your failures, and suggested a way forward.
Because I thought you would grow and learn from your mistakes. But if this is how you're going to respond, I will work on selling off everything I have from both GLS and SPL. Guess it's time to move on and find a better team that's willing to admit their own shortcomings.