Thanks for taking the time to read our position on these allegations. Simply put, the users that received a reduction in rewards was because of wash trading, which Furucombo has had a stance to prevent since creating our campaign and submitting our proposal for funding.
Our stance on Wash Trading
Our stance to prevent wash trading can be found in our proposal, and our campaign details.
In our proposal for the STIP funding, we indicated that we would “focus on how we can reduce sybils, or reduce the amount of people gaming the system for rewards.”
In our campaign details we indicated that “upon receiving the bi-weekly rewards, the Furucombo team will do an internal review of the volume and reward breakdown to ensure that there are no participants attempting to game the system” (reference)
Campaign Changes
In order to allow more users to take advantage of the rewards (if they were actually utilizing Furucombo to manage their positions), we made some slight changes to our campaign.
On our report for Feb 22nd on our STIP program update, we indicated that we would add deposit, withdraw, repay, and borrow transactions to the kinds of transactions that would earn Arbitrum rewards. Originally it had just included Collateral swaps, Debt swaps, Leverage, and Deleverage.
Wash Trading
After the campaign details were updated, over the next few weeks we noticed a massive influx of transactions from many different wallets, all with the intention of wash trading by depositing and withdrawing their positions over and over. These transactions can be proven on-chain as wash trading transactions.
In an effort to pursue amicable ground, we provided truncated rewards to those users who wash traded. The list of said rewards (allocated vs. adjusted) can be found here.
Therefore we believe that these users had taken a predatory approach to our campaign, and should therefore not be allocated any Arbitrum tokens above and beyond what has already been distributed.
In response to the wash trading, the Furucombo team has frozen the rewards with the intention of getting the view of the Arbitrum DAO on how to proceed. If after deliberation the Arbitrum DAO wishes that the tokens be distributed, even in the event of wash trading, then we will do so.
Thanks again for taking the time to read our position. We hope this provides the Arbitrum community some insights into why we believe we have not acted in a malicious way, and that we have taken steps to minimize a loss from the Arbitrum community.