An Open Letter to Our Community
What really happened to the Dolphin Pool?
Dear Gelato Community,
Gelato’s public token sale was completed yesterday. First of all, we’re thankful for everyone who participated, and we’re truly humbled by the amount of interest and requests we have received.
We are well aware that many of you suffered from an unexpected experience during the Dolphin Pool phase of the token sale. You have been posting comments — we hear you, we’re privileged to have many passionate members like you, and thank you for letting us know about your concerns. In the past 12 hours, we’ve been investigating the issues. Thanks for being patient during this time.
A quick recap: the sale happened in two phases and pools: Whales (60% of the sale or ~3M$ worth of GEL) and Dolphins (40% of the sale or ~2M$ worth of GEL). The Whale Pool started at 20:00 CEST and the Dolphin Pool started at 22:00 CEST on September 13, 2021. The Whale Pool sold out within roughly five minutes and overall everything went as expected. The Dolphin Pool sold out within just one minute and many participants that observed it had a lot of complaints about how this pool got filled. We have looked into the Dolphin Pool transactions and we will address those complaints and share our findings here:
Shortly after the Dolphin Pool opened, hundreds of individually whitelisted and KYC verified Dolphin addresses were sending transactions in bulk with very high gas prices. This was spotted by many diligent community members and Gelato core team members. We looked into this and found that all of these transactions abided by the key rules of the token sale mechanism insofar as they were all: 1) Dolphin addresses from individuals who completed full KYC verification with our KYC provider Synaps, 2) each Dolphin could only buy once, 3) each Dolphin could not buy more than the maximum per Dolphin.
However, what clearly occurred is that a seemingly small group of individuals launched a coordinated snipe on the Dolphin Pool by abusing the KYC system in place. Since hundreds of individual transactions were clearly sent in bulk with the same gas price, there is hardly any doubt that some entities were in control of hundreds of KYC verified Dolphin addresses and ran a script to front-run everybody else.
This is definitely not how we would have hoped for the Dolphin Pool to go. Our assumption and intention was to strictly whitelist and KYC a limited number of Dolphin participants, in order to increase the per capita distribution of GEL bought during this phase of the sale. Unfortunately, it’s clear now that conventional KYC measures are no silver bullet against Sybil attacks and greedy individuals trying to work their way around these measures that were put in place to link one real participating address to one real participating human. It is not clear how exactly the snipers were able to get a hold of so many different identities, who all had passed extensive KYC steps including liveness selfie checks and uploading identity cards and a proof of residence. It could be that they literally paid hundreds of people to get themselves KYCed and then asked them to hand over control over their KYCed email accounts and Dolphin addresses to them.
It makes us really sad that so many good and honest community members were not able to participate in the Dolphin Pool because of this.
We would like to re-open our channels so that we can communicate constructively with the community. Our Telegram and Discord are now open.
We will do our best to serve the Gelato Community, and to be transparent to our valued community members. Most importantly, we will continue building and pushing the entire web3 ecosystem forward.
-The Gelato Team
About Gelato
The Gelato Network is the automation layer of DeFi and beyond. Gelato is building the underlying infrastructure ensuring reliable automation on top of Web3 and with it a key part of the Web3 middleware stack, enabling trustless, automated flows of value between smart contracts. Serving a multitude of use cases, Gelato has powered limit orders, debt refinancing, and LP management across multiple chains and has partnered with the leading DeFi and blockchain projects like Instadapp, Furucombo, Zerion, and more.
With the pace that Gelato is shipping, keep up with all the latest developments on Twitter, Telegram, and Discord.
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