EOS Whales Behind Spam Attack on Ethereum Network, Claims DApp Developer

Francisco Memoria
  • A DApp developer and several ETH users claim EOS is attacking the cryptocurrency's network.
  • This as hundreds of accounts allegedly funded by an address with crowdfunded EOS are creating useless tokens and "wash trading" them.
  • Per Block.one CTO Dan Larimer, the company behind EOS has better things to do than attack the second-biggest cryptocurrency.

The Ethereum network has allegedly been under a spam attack that’s meant to harm its reputation, according to various Reddit users and analysts. Recently, transaction fees surged over 100% as the cryptocurrency’s network was being clogged with transactions.

DApp creator Justo, from the team that launched two gambling games called PoWH3D and Fomo3D, claims 40% of the Ethereum network was being used by a contract that issued an ERC-20 standard token called “IFishYunYu.” The token, per Justo, has no features, and does nothing.

Despite its uselessness, thousands of alleged spam accounts are transferring massive amounts of these tokens for no apparent reason, with some flowing through the controversial FCoin exchange. Per Justo, the exchange is just a ruse, as the real attacker is EOS.

Speaking to TrustNodes, the dApp developer claims thousands of these tokens have been appearing, presumably in an attempt to launch the attack:

Thousands of random tokens, with no website, or bootstrapped template websites made in hours. Wasting hundreds of ethereum daily, hundreds of thousands of dollars to drop tokens. This happened up until the launch of EOS, on the 6th, then immediately stopped.

Justo

What makes the large amount of transactions look like an attack is its unusual effect on transaction fees. When CryptoKitties was clogging the Ethereum network in December, about 1.4 million transactions were being processed a day, and fees were under $1. Now, with over 500,000 being processed, fees are above $2.

Further connecting the attack to EOS is the path some IFishYunYu tokens have taken. It reveals the token’s creator, after issuing 5 billion tokens, split them across 500-600 different accounts and started spamming the network. Blockchain data shows the transactions are being funded by an address that has “a lot of crowdfunded EOS.”

On Reddit, a thread exposing the attack reads:

Gee, that sure is a lot of crowdfunded EOS, hundreds of thousands to be exact. From an account that seems to receive large sums of eos and immediately market sell them for thousands of ETH, which is then distributed out to contracts like this. Contracts that have been pulling this kind of transaction attack consistently across the ETH network.

Reddit

EOS could have a reason to attack the ETH network, as some of its supporters claim it is an “Ethereum killer.” The cryptoasset doesn’t use a Proof-of-Work system, but goes with Delegated-Proof-of-Stake, which allows it to process thousands of transactions per second, but sacrifices decentralization.

Responding to the controversy, EOS architect and Block.one CTO Dan Larimer claimed the company has better things to do than attack the second-biggest cryptocurrency’s network “when all it takes is crypto kitties.”

eos.png

EOS is notably no stranger to controversy, as last month its 21 block producers (BPs) were ordered by the EOS Core Arbitration Forum (ECAF) to freeze 27 accounts. In response to the controversy that ensued, Larimer proposed a new constitution that seemingly stripped the ECAF off its powers.

Bitcoin and Hi-cap Altcoins Bump, Run Into Hard Resistance

A strong relief bounce has come in for Bitcoin (BTC) after its breakdown from the previous October market structure. It remains to be seen whether this bounce is strong enough to finally break the Bitcoin downtrend that has been driving price down since July; but meanwhile, altcoin market share is continuing to grow versus Bitcoin, which was recently pushed back below the historically high 70% mark. This has translated lately into many altcoin surges.

OKB

OKEx’s exchange token OKB took a nasty tumble in the past two weeks, riding Bitcoin’s tail down for almost 50% loss in USD value. This is because OKB/BTC has followed Bitcoin itself, moving down *with* it, in a behavior that is typical of altcoins – very few have been lately moving inversely to Bitcoin. OKB’s fiat losses are thus multiplied by BTC’s losses versus fiat.

Looking at a 3-day OKB/USD chart, we can see the aggressive selloff that has taken place. This selloff unfortunately took out an important price zone at $2.40, and with it an obvious uptrend. Price was held in previous resistance and a strong buy wick has pushed it back up.

Maybe a downtrendOKB chart by Charts.Cointrader.Pro

This chart looks pretty similar to Bitcoin’s; and thus, like with Bitcoin, OKB/USD may have entered a downtrend. But the very strong defense wick that came in at around $1.77 to push the candle back up says otherwise.

We don’t see any strong divergence on the daily RSI (it is too close to call), but the histogram is strongly contracting up at present. Most of this price action is Bitcoin-driven, so we also have to take a look at the OKB/BTC charts to get an idea of what’s going on.

Looking on a daily OKB/BTC chart, we see a slightly better picture than versus USD – although even here, we could see a rejection at the support recently lost. It is slightly better because the broader uptrend is still preserved, with a possible hidden bullish divergence suggesting it could continue.

Hidden bullish divOKB chart by Charts.Cointrader.Pro

But OKB here is also facing resistance again at previous resistance, and at the EMAs. The histogram is trending up flat, which means it could easily start expanding again and take the exchange token back down. At any rate, we should know soon which way OKB will pick.

BTC

And then there’s Bitcoin. Currently in the midst of a well-needed and expected relief pump, Bitcoin still has a long way to go to prove that its downtrend – in play since the summer – is over.

On the daily, we can see that Bitcoin has succeeded in reentering the just-lost previous market structure, at $7,300; and with it, cleared the first Fibonacci retracement level. But only after retaking the 0.382 level, lying at about $8k, can we start to consider this surge as having a chance to reverse the larger downtrend that has taken hold.

Don't get excited yetBTC chart by TradingView

The RSI here was deeply oversold, but we will likely have to see a retest of the bottom of the zone to start claiming a bottom – and we’re nowhere near that. The histogram, meanwhile, is contracting up gently, which is slightly bullish. With this reading, we could make it to $8,000 before stronger selling.

ETH

Finally, the leading altcoin Ethereum (ETH), has been typical of altcoins in that it too has followed Bitcoin’s lead – even versus the Bitcoin trading pair. And of course, this has resulted in a multiplied Bitcoin price action, essentially.

On the ETH/USD daily, we see Ethereum mostly in the same boat as Bitcoin. It has taken out a very important support zone, ending at about $155, from earlier in the year when it first broke free from the 2018 bear consolidation zone. The altcoin is retesting that level now, fro the bottom, but it will be a tall order to retake it now amid a general high-cap downtrend.

Just as with bitcoin, this is still just a bounceETH chart by TradingView

Just as with Bitcoin, the RSI has taken one deep trip into oversold territory, but it will probably need another trip down and/or a higher low to start looking like a stabile local bottom. It has already almost reached the next support at $130.

Breakout scenario incomingETH chart by TradingView

On the ETH/BTC chart, we can see the steep drop starting November 20, just when Bitcoin really accelerated to the downside. We also see that a likely consolidation triangle is approaching its end – and indeed, may soon break to the downside. We see a histogram that wants to contract up, and push price action into the blue triangle. But likewise, a retest of the blue support below is very possible: Ethereum’s long journey to finding a new bottom on this trading pair seems to never end.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.