After years of anticipation, the star project Ethereum L2 ZKsync is finally launching its token. Today, the community is buzzing with users sharing the amount of ZKsync airdropped tokens, with ZK trading at $0.9 on the Whales pre-trading market at the time of writing. Reports indicate that early users received 36.75 billion ZK tokens in the airdrop, accounting for 17.5% of the total supply.
To qualify for the airdrop, users had to actively engage with the ZKsync ecosystem. However, just days before the token launch, the project team took advantage of the mainnet upgrade to exit with the funds, adding another project to the “rug army” on ZKsync.
The rug pull project this time was GemSwap, a decentralized exchange platform on ZKsync, operated by a team named Gemholic. Last year, Gemholic raised 921 ETH on ZKsync. Due to technical differences between ZKsync’s Era network and the Ethereum mainnet at the time, when Gemholic launched on ZKsync, they directly copied Ethereum contract code without fully testing for ZKsync architecture differences. This led to the transfer() function in Gemholic’s contract incurring gas costs exceeding the limit on ZKsync, resulting in locked funds.
The Block’s research director, Eden Au, highlighted this issue on Twitter, stating, “A project on ZKsync raised 921 ETH ($1.7 million) through token sales, but the funds are forever trapped in the smart contract. The transfer() function works for Ethereum and other EVM chains but not for ZKsync.”
ZKsync quickly responded to this issue and proposed a solution, stating, “In this scenario, we have found an elegant solution that addresses broader gas-related issues. It will require minimal changes to the protocol’s non-metered gas, allowing for full fund recovery.”
Gemholic also made promises, stating on their official Twitter account, “We understand many have lost faith, but we still believe the ZKsync team can make things right. We need everyone to trust us. Once the protocol is confirmed, we will launch marketing activities and project pre-launch. We will also refund excess funds.”
However, this tweet can now only be viewed in web archives. After being able to withdraw funds from the ZKsync mainnet, Gemholic deactivated their Twitter account.
Over a year later, the 921 ETH raised by Gemholic has tripled in value to over $3 million. On June 7th, ZKsync initiated a mainnet upgrade, introducing a feature in v24 version that allows the transfer() function to be called without specifying gas to improve compatibility with Ethereum.
This adjustment presented an opportunity for the Gemholic project participants who expected repayment but instead witnessed another rug pull project on ZKsync. Community findings revealed that Gemholic withdrew 921 ETH from the project contract the day after the V2 upgrade and bridged it to the Ethereum mainnet. Subsequently, screenshots circulating in the community showed Gemholic’s founder, Solomon, deleting all TG group messages, and the Gemholic official Twitter account being deleted, indicating the project team had exited with the funds.
This incident sparked anger in the community, with NSerec, the founder of zkMarkets, directly tweeting, “Today, $3.5 million was stolen by Gemholic, a company that has been making false promises to investors for a whole year about refunds but committed fraud once the funds were finally unlocked.”
In fact, Gemholic is not the only project on ZKsync to rug pull; the community even criticized ZKsync as a “rug chain.”
On April 13, 2023, SyncDex Finance, an ecosystem project on ZKsync, was suspected of a rug pull. According to information on related pages, users collectively staked over 100 ETH and 98,444.8 USDC in the project, and its official social platforms and Discord channel were closed after doubts were raised.
Less than a month later, a meme project named SHIBERA on ZKsync was also accused of a rug pull. The project’s official Twitter account was deactivated, and liquidity pools on SyncSwap were drained. Before the rug pull, SHIBERA had announced an airdrop.
One of the most memorable rug events in the community came from Kannagi Finance, a prominent DeFi project on ZKsync Era, where in July last year, the TVL of the project plummeted overnight from $2.13 million to just $24, with the official Twitter account quickly being deactivated.
Just two weeks ago, xBank Finance, a lending platform in the ZKsync ecosystem, also faced suspicion of a rug pull. It was reported that the protocol’s total value locked (TVL) had nearly reached zero, and the official Twitter account was frozen, leaving users unable to access the latest developments. Previously, xBank Finance had been one of the more active DeFi projects in the ZKsync ecosystem.
Currently, the ZKsync team has not made a clear statement on a user fund recovery plan. In the case of the GemSwap incident, recovering transferred funds for users who suffered losses may be quite challenging. In previous rug incidents within ZKsync, effective action was not taken.
The ZKsync airdrop is seen as a “big deal” by the community, but these rug projects serve as a constant reminder to crypto community users that the exploration in the online world not only holds “treasures” but also presents lurking dark risks.