Token sales have been a great tool to scam retail investors. With the rise of IEOs, the potential targets a token sale can scam has multiplied. On one hand, there are scam exchanges that are tricking uninformed project founders to pay huge IEO fees for a chance to raise capital on a pure wash-trade exchange.
Now, for the first time, a project’s team has managed to scam an exchange. Props to Akropolis. In the cryptocurrency space, exchanges have a lot of power. Getting a listing on a major exchange can actually make a project. However, exchanges have no reason to share their value. Thus, a project must display the ability to add a large number of users to an exchange, pay a very heavy price, or, in Akropolis’s case, fake it all.
This is a story of how Akropolis faked it till it made it.
Before diving into the specifics, it’s important to understand that exchanges are just like any other business. They want volume and users; as CZ admitted, Binance listed DOGE not for the sake of technology, but because DOGE has a large community and Binance would like to convert them into users.
Binance isn’t an exception: every exchange wants more users, as naturally, every business wants to grow its base of customers.
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Next Huobi Prime: Akropolis
Huobi is one of the most liquid exchanges in the world; its cold wallets show a multi-billion dollar holding. For exchanges, volume is power and this has allowed Huobi to list (extremely) over-valued but hyped projects like Top Network and Reserve.
Listing on Huobi can bring a project’s token the volume needed to maintain a decent price and exposure to a large audience. Of course, the listing has to be a good trade: the project must offer Huobi some benefit too as otherwise it’s a one-way deal. Hence, like most top exchanges, Huobi opts for projects that are very popular.
Akropolis, like most so-so developments of the Crypto industry, isn’t popular. But you may be tricked into believing it is. So, how did Akropolis manage to get a Huobi IEO? The answer is simple: By putting up a façade of an active community.
$190,000 can buy a lot more than a fake community and Akropolis has proven that. This amount of money can make the Telegram group active for long enough, with seemingly interested community members, to give a major exchange the impression that there’s genuine interest and demand for a project—even though, there isn’t.
What is Akropolis?
Akropolis is supposed to be a protocol for decentralizing different financial operations like trading, borrowing, and saving. It aggregates the benefits of different existing protocols (0x, Augur, ETHlend, etc.).
However, despite being around for over 1.5 years, Akropolis hasn’t laid down any foundation for acquiring users. The project’s Cashflow Relay is an empty marketplace—absolutely empty. The project’s saving network has some savings orders, but most of them are empty. Akropolis merely used its community Quests to give the impression of project interest; the projects applications’ demand shows there is no interest.
For Huobi’s standard, such a project would be a major move down from Top Network and Reserve. Yet, Akropolis managed to join that club. Akropolis is a great lesson for the many unknown projects in this industry that want to list on a good exchange; start taking notes.
A Look at Community Quests
Perhaps Akropolis doesn’t have world changing technology but maybe it has a roaring community like DOGE? If Binance can list DOGE, then Huobi can do an IEO for Akropolis?
Like most projects that lack a real community and revolutionary technology, Akropolis had little odds of listing on a decent exchange. So, its team decided to come up with a novel tactic to earn a decent listing. In the end, they got more than just a listing as they’re getting an IEO on Huobi.
Akropolis’s team is well-aware that exchanges are always desperate for volume and users. So, if Binance can list DOGE for growing customer base, then Huobi (or other top exchanges) would be willing to list a new-comer if the project has a large, active community. Now, the challenge is how to deliver the large, active community.
Akropolis spent $100,000+ in 2018 on community quests in hopes of educating people about its project. However, most of the traction they received died of once the quests ended as, typically, driving interest through payments for non-measurable value-added tasks attracts the wrong kind of interest.
Despite the first failure, Akropolis went on to launch a Quest one more time. This one was twice as large as the previous two. Why repeat a mistake? In theory, it was obvious to the team that the first two quests drove interest; using another one to sustain that interest could give the impression of a thriving community and earn a listing that would otherwise be out of the reach of projects of this caliber.
While none of the Quests brought in interest for the project’s applications, which should be the key focus of promotional spending, they did drive a mirage for engagement. There’s a stark difference between the interest driven from Quests and airdrops. Quests make people answer mundane but somewhat relevant queries about the project. Does this draw project traction? No. It does, though, make it look like there’s an active (and transient) community, as long as there’s money to be made with easy (and fun) tasks.
Here’s how it goes:
Step 1: Grow the Numbers
Given that Akropolis has a Telegram group with over 8,000 people, you may be tricked into believing their community quests weren’t a complete waste. But then there’s this:
Based on the participation records in this sheet, most of the project’s members are driven by the airdrop. Any project can just run an airdrop or buy group members. Numbers aren’t enough and Akropolis understood this. To stand out, the group has to be active and must show interest in the project.
If you want to trick a major exchange, do not skip step 1; it’s a necessary formality.
Step 2: Fake the Interest
Akropolis has come up with a new means of engaging the community for a temporary amount of time at a very high expense ($190,000 to be exact).
In what it has termed as “Community Quests,” Akropolis has given away over $190,000 in tokens. The Akropolis quests reward people for playing puzzle games and trivias. This stuff is fun so it’s easy to get people participating.
Image: None of this has anything to do with what Akropolis is creating but these are easy questions that anyone can participate in. Most people can easily Google the background needed to answer Q1. You can’t be picky if you want to fake engagement!
You may think, “How do meaningless or low-value events add value to a project?”
They don’t, but you’re missing the point. The goal of these steps is not to build a genuinely desirable project but to trick an exchange (and plenty of people in the Crypto community) into thinking that your project has actual value and demand. The goal is to just make it look like people are interested in the project so a top exchange is willing to offer a listing.
Since only a small number of people would be interested in going through the unused technology Akropolis is creating, Akropolis used a clever tactic of making Quests around easily-googled topics and personal opinions, that relate to its project. So, even though no talk of technology or product development took place, a topical view of the project’s community made it seem like people are interested.
Take-away: To make use of step 2, do not make people talk about your technology. Just get them to talk about their views on what you are trying to solve. This is a lot easier and will make your fake engagement grow with ease.
Step 3: Maintain the Façade and Reach out to an Exchange
With step 1, a project is able to acquire the numbers needed to show a large community. With step 2, a project can show the active interest needed to show that a community is genuine. Of course, the interest shown with step 2 is fake but if it can held on for long enough, it can trick third parties into thinking a product has demand.
Take your numbers and push them to a top exchange. Use your fake community interest to shill the project and at least one user-hungry major exchange will bite.
And finally, after all the faking, you’ve made it. Akropolis may not need to fake a community now as this spotlight may, for once, bring users who are actually interested.
Why Pad Up Numbers
So why spend $190,000 on events that do nothing beside drive Telegram size and activity? Well, Akropolis got a grand IEO so seems like the tactics works.
Akropolis boosted its community size with rewards given for joining the group. It held activities (Quests) to make it seem like the group had active discussions; ironically, often the quest topic wasn’t about the project’s technology.
The smoke and mirrors—at an expense of $190,000 in tokens, gave the team the opportunity to shill themselves to Huobi by showing all the fake activity they had and all the fake community members they acquired. Like any business, the exchange pounced on the opportunity to grow its customer base because the Quests gave the impression that Akropolis has a real (large) community.
Akropolis isn’t the antagonist of this story; it’s the protagonist! For once, someone is sticking it to the major centralized exchanges, and now, you know how to do it too. If you’re a startup in the Crypto space and are having a hard time getting noticed, fake it till you make it so you can prune some of the value major exchanges have without adding any value to them.
Of course, this tactic may no longer work if the exchange teams read this piece.