Ponzi Games Are Breaking Out on the Ethereum Blockchain
The hottest new apps on ethereum resemble an old favorite: the Ponzi scheme. At least that's the early consensus on FOMO 3D and PoWH3D, two of the platform's top three apps entering Tuesday.
According to data website DappRadar, both games have amassed 20,000 ether ($9 million) in trading volume over the last 24 hours, a figure that puts them on par with top decentralized exchanges and that exceeds the highest highs of CryptoKitties, the blockchain's most famous viral decentralized application (dapp) to date.
Perhaps unique to both projects though is how they create an incentive to bring new people in so users can share the spoils as they do so. Both applications also collapse if new users quit joining in a way that's similar to a basic pyramid scheme.
However, these particular games make it much more complicated (and maybe more fun).
"At the core, they seem to be taking the ideas of pay-per-bid auction models that were popular in 2009–2011, except instead of selling 'real' products for the bid price, they sell nothing tangible or of real value," Sid Kalla, of token project consulting firm Turing Advisory Group, told CoinDesk.
In penny auctions, people paid a tiny amount of money to make a bid on a real item. The final winning bidder might get a deal, but the organization running the auction would make many times over the price of the item from the fees collected on the way to that bid.
At least then auctioneers took on some risk: the cost of the item and operational costs. With these games, there's none (except perhaps indictments).
Both projects appear to be by the same group, which calls itself "TeamJUST." The creators are keeping themselves anonymous and were not immediately available for comment. The two products have sparked a furor among crypto enthusiasts, who are warning buyers not to support what they allege are pyramid schemes.
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