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Protecting ShapeShift's OP Rewards Programs from Bots and Sybils: A Case Study

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ShapeShift envisions a financial system without borders, built on decentralized protocols, and aims to offer a comprehensive alternative to centralized exchanges (CEXs). It is an open-source, multi-chain, self-custody crypto platform helping individuals achieve financial sovereignty. Currently, many CEXs provide some form of crypto Earn product that is protected from Sybil attacks through KYC requirements integrated into the platform. ShapeShift DAO has replicated this user experience in DeFi and selected Gitcoin Passport as its anti-sybil tool to implement the OP Rewards program. Gitcoin Passport effectively addresses these challenges through our advanced Sybil defense and Identity/Reputation system, utilizing Gitcoin Grants-grade technology to quantify unique transacting addresses accurately. The partnership helped disqualify over 5,700 Sybil attacker-associated addresses and more than 45K OP was saved from falling into the hands of Sybils. 

ShapeShift DAO - A Multi-chain Crypto Home Base

After seven years of building a top crypto trading platform as a centralized entity, ShapeShift began a new journey in July 2021, launching the ShapeShift DAO to create a borderless, self-custodial, multi-chain financial system built on open, decentralized protocols. ShapeShift airdropped its governance token, FOX, to over one million past users and community members and started anew, intending to help billions achieve financial sovereignty. “At ShapeShift, we have a lot of experience being Sybil attacked. We have seen the bots come out in armies whenever we tried to give away crypto for users to try our product. When KYC was the main method of verifying uniqueness, it cost us money every time just to review even one of those fraudulent attempts.”, said WillyFox, Head of Decentralization at the Fox Foundation.

Optimizing DeFi Reach: ShapeShift's Unified Approach

The ShapeShift community believes that a decentralized interface and blockchain data infrastructure are imperative to bringing DeFi to the masses. Discovering a strong sense of alignment with Optimism on the principles of decentralization, self-custody, and trustless finance, ShapeShift participated in the Growth Experiments grants to help expand the reach and appeal of the Optimism ecosystem. ShapeShift identified a few fundamental features important to achieve this:

  • Fiat On-ramps
  • Swapping
  • Cross-chain bridging

However, the team also noted that there are two main problems associated with current efforts to incentivize these actions:

  1. Fragmentation - these features are often spread across multiple dApps
  2. Sybil Resistance - offering significant incentives for utilizing decentralized protocols such as swapping/bridging can lead to abuse

ShapeShift proposed to solve both of the problems above through a new incentive experiment that:

  1. Unified all three features in the ShapeShift interface for the Optimism Network
  2. Implemented a Sybil resistance layer that balances UX friction with incentives offered

This approach enabled ShapeShift to target a wide range of crypto users, all requiring these features to interact with the OP network via its interface. As a recipient of the 200K OP grant for Growth Experiments, ShapeShift aimed to onboard 10k+ monthly transacting addresses to the Optimism network at a substantially reduced cost.

Sybil-Resistant Onboarding using OP Rewards

The 6-month Growth Experiment grant was designed to onramp new users to OP Mainnet and the ShapeShift interface through incentivizing Bridging, Swapping, and Fiat Onramping. Each action was rewarded with a different level of OP Rewards and Gitcoin Passport was implemented for sybil attack mitigation. The program was broken into month-long seasons and deployed with the help of ThriveCoin, a crypto rewards service also utilized by Bankless and Ape DAOs. Success for the OP Rewards program would involve achieving a target of 10k unique users, who collectively generate a minimum of $1m in volume through swaps on and bridging to OP Mainnet.

Season 1 started on June 2, 2023 and ended on July 5, 2023. To protect these quests from sybil attack, ShapeShift required users to have adopted Gitcoin Passport. A Passport user who completed all three feature quests represented a unique and valuable target user successfully onboarded to Optimism.

Gitcoin Passport's Sybil Defense in Action

Over 6,000 unique members of the FOX Fam participated in Season 1 rewards. The program saw strong engagement, and the 6-month grant KPIs were hit in under 2 months. Due to unusual onchain activity towards the end of the second season, ShapeShift DAO requested further assistance from the Gitcoin Passport team to analyze the data and weed out potential Sybil attackers. 

The program concluded by exceeding the target number of unique transacting addresses by over 50% while disqualifying over 5,700 Sybil attacker-associated addresses. Additionally, over 45K OP was saved from falling into the hands of Sybils. 

“Sybil attacks used to be a really big challenge we struggled with and it pretty much resulted in us not being able to effectively give away free Crypto even though it’s such a great way to get users to check out your app. So we are grateful that Gitcoin Passport is available to other projects so that we don’t all have to build this and solve this huge problem ourselves,” said T Wells.

Towards Incentive Equity in Crypto

Building a thriving community or ecosystem requires addressing two crucial aspects:

  1. Identifying "high-quality participants" who genuinely contribute to your community/ecosystem. What characteristics do they possess that warrant their inclusion?
  1. Preventing low-quality participants from joining without imposing an excessive administrative load on the community/ecosystem as it grows.

There are many incentive projects in crypto, but few have the necessary measures to mitigate Sybil attacks that cause significant inequity in the distribution of rewards. Any project considering onchain rewards for user actions can easily integrate Passport and address these challenges through our advanced Sybil defense and Identity/Reputation system, utilizing Gitcoin Grants-grade technology.

For more information on how to protect your app with Gitcoin Passport, check out the Passport Documentation. Also, come find us on Discord in the passport-builders channel channel if you’re interested in getting help from the Passport team in integrating Passport into your app.

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