PancakeSwap Trading Competition Overview
PancakeSwap’s trading competition aimed to reward random winners; however, blockchain records indicate that nearly half of the 1,700 winning wallets belong to interconnected clusters.
This competition was the second iteration of its kind, designed for investors to earn points by trading the tokens from five sponsors associated with the Binance Alpha program: League of Traders (LOT), Bedrock DAO (BR), MilkyWay (MILK), NodeOps (NODE), and Moonveil (MORE).
To accumulate points, traders needed to execute their trades on PancakeSwap, the leading decentralized exchange (DEX) by total value locked on the Binance-founded BNB Chain.
Competition Structure and Findings
In its campaign introduction, PancakeSwap stated that winners meeting a three-tier trading volume threshold would participate in a “random lucky draw.”
“The wallets were directly connected to each other, and they were getting picked. The chance of that happening consecutively is close to zero,” a representative from League of Traders said.
“The [prizes] were not distributed fairly to the participants,” the representative claimed, adding that the winners seemed to have been “hand-picked” instead of randomly selected.
PancakeSwap’s Role in the BNB Ecosystem
Since gaining popularity in 2021, PancakeSwap has remained a central player in the BNB ecosystem, particularly as rising Ethereum gas fees pushed traders toward more affordable options.
League of Traders informed the news that PancakeSwap enlisted Binance Alpha projects to sponsor its second trading contest, with each contributing $50,000 towards the prize pool. Binance Alpha serves as a platform granting investors early access to pre-listed tokens.
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League of Traders, along with four other Binance Alpha projects, elevated the prize pool’s value to $250,000.
Participation Details
To enter the trading competition, investors were required to accrue trading volume for the sponsor tokens on PancakeSwap. The prize pool was divided into three tiers: $2,000, $5,000, and $10,000.
Participants could enter the random draw for all five tokens but were not eligible for the same token more than once. Thus, the maximum potential reward per wallet was capped at $2,500.
Initially set to run from July 7 to July 27, the trading competition was extended to August 5.
Discrepancies in Winner Selection
PancakeSwap’s blog post claims that winners would be chosen at random, but blockchain records suggest otherwise. For example, wallet 0x521…3E670, a tier three winner, received 21,730 LOT tokens from the competition’s reward wallet on August 7. This wallet’s activity log indicates it traded LOT with WBNB on PancakeSwap on July 24. Once the trading threshold was achieved, it converted the tokens back into BNB, then transferred this BNB to another eventual winner.
This LOT winner financed the wash trades using $2,130 or 2.7 BNB at the time. Less than a minute before initiating the circular trades, it received the BNB from another tier three winner of MORE (0x463…5d040).
Investigating the MORE winner’s wallet activity revealed a similar pattern. It received BNB from a wash trading wallet that was ultimately chosen as a winner and utilized those funds to carry out its own series of trades for another sponsor token. After completing its wash trading, it sent off the unspent BNB to another wallet that also became a winner.
In documentation provided, League of Traders identified 852 winners suspected of belonging to this cluster of wallets.
“They used the same funding source… and when it came time to distribute the prize, all these connected wallets received the prize, which is very improbable,” League of Traders stated.
Concerns and Future Competitions
The controversy underscores transparency concerns for projects that invested tens of thousands of dollars to sponsor the competition, highlighting issues with one of BNB Chain’s premier platforms.
PancakeSwap recently wrapped up its third trading competition, this time featuring six tokens and a total of $300,000 in rewards, which differed from the previous focus on Binance Alpha alumni.
It announced on X, “2,040 random lucky winners have been rewarded with respective project tokens. Check your wallet to see if you’re one of them.”
PancakeSwap added that the next trading competition is “coming soon.”
