Anonymity is a double-edged sword in Web3

Was Solana was a huge promise that never quite delivered?

I just wrote an article about Solana’s outages, hacks and promise of being an Eth-killer.

Seems like there are more troubles beneath the blankets.

Apparently, 2 brothers, Ian and Dylan Macalinao, faked a dozen different identities and built Saber Protocol to boost the TVL of Solana.

Saber was the biggest DeFi App on Solana.

TVL is the total value locked and a commonly used indicator on how large and successful a blockchain is.

More value locked into the blockchain means more users and more activities hence more growth and life.

So it makes sense to pump up the TVL of a blockchain so as to send strong signals to the market that the blockchain is growing and market has confidence in it.

Higher TVL of Solana leads to higher prices of the Sol token, boosting valuation tremendously.

“The Macalinao brothers’ operation with Saber was seemingly undertaken with explicitly deceptive intent: “I devised a scheme to maximize Solana’s TVL: I would build protocols that stack on top of each other, such that a dollar could be counted several times,” Ian Macalinao wrote in the unpublished blog post.”

I am certainly impressed by the level and effort of investigative journalism put into work to uncover this.

In simple terms, the developers created a way to count the money multiple times, manipulating the TVL to be much higher than it actually was.

They were counting assets multiple times across different services and protocols that looked different but are actually the same thing.

How big was it?

Solana TVL was $10.5B.

Saber protocol had $7.5B at its peak.

Simply put, 3/4 of Solana’s TVL could have been manipulated and falsely reported.

What did they do wrong?

Well, they faked their identities.

That’s quite common in web3, where you are essentially unknown till you are properly doxxed.

They also create entire protocols and built services to attract money.

This created fake signals of a large and growing base of users and total value, but were actually quite misleading.

This happens all the time in the crypto space.

Creating hype, generating signals and sending indicators to the market that something is going to moon.

And when people buy into it, you dump the tokens on them and make away with a tidy profit.

Anonymity was a prized feature of crypto, but also its most controversial.

In this case the Macalinao brothers actually spent extra effort to game the system and build protocols on top of protocols to execute their plan.

It was a well-devised, patience and very calculated move.

Building a protocol is not easy at all.

Coupled with the fact that Solana is one of the hottest chains with surging number of users, complexities and problems exponentiate.

You got to respect the Macalinao brothers hustle and hardwork in this long con (if this is indeed true).

Now, they are moving Saber to Aptos, another layer 1 blockchain.

To rinse and repeat?

Let’s just hope not.

How will this hurt Solana?

Will people still trust the Macalinao brothers?

How can we prevent such things from happening again?

Can anonymity and web3 coexists peacefully?

Those are the questions we have to wrestle with for web3 is grow stronger.

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Is anonymity a good thing in Web3?

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