Half of PancakeSwap Trading Competition Winners Linked Through Wash Trading
PancakeSwap’s recent trading competition, advertised as a random lottery rewarding active traders, appears compromised by interconnected winner wallets, according to blockchain analysis conducted by Cointelegraph.
The contest, held from July 7 to August 5, incentivized trading of five Binance Alpha program tokens—League of Traders (LOT), Bedrock DAO (BR), MilkyWay (MILK), NodeOps (NODE), and Moonveil (MORE)—on PancakeSwap, the leading decentralized exchange (DEX) on the BNB Chain. Participants earned points by trading these tokens, qualifying for a three-tier prize pool totaling $250,000.
Evidence of Wash Trading and Circular Funding Among Winners
Despite PancakeSwap’s promise of a “random lucky draw” for winners surpassing trading volume thresholds, analysis uncovered that nearly half of the 1,700 winning wallets (approximately 850) were financially connected. These wallets engaged in wash trading—repeatedly exchanging tokens between themselves using BNB funds passed along a chain of wallets to meet volume requirements artificially.
For example, one tier three winner wallet, which earned 21,730 LOT tokens, received BNB from another winner wallet moments before executing rapid back-and-forth trades to inflate trading volume. After meeting the threshold, it transferred leftover BNB to yet another winning wallet, continuing the cycle. This pattern was consistent across multiple wallets tied to different sponsor tokens.
A representative from League of Traders, one of the contest sponsors, told Cointelegraph, “The wallets were directly connected to each other, and they were getting picked. The chance of that happening consecutively is close to zero.” They further asserted the prize distribution was unfair and suggested winners appeared to be “hand-picked” rather than selected randomly.
Implications for Contest Integrity and Platform Transparency
The findings raise critical questions about the integrity of PancakeSwap’s trading contests and the transparency of its prize distribution mechanisms. Despite repeated outreach, PancakeSwap and the other Binance Alpha sponsors did not respond to requests for comment prior to publication.
PancakeSwap has since completed its third trading competition, expanding the prize pool to $300,000 across six tokens and rewarding 2,040 winners. The platform announced an upcoming competition but has yet to address concerns regarding the fairness of previous contests.
Context: PancakeSwap’s Role in BNB Chain Ecosystem
PancakeSwap has been a major player in the BNB ecosystem since 2021, benefiting from Ethereum’s high gas fees by offering a lower-cost DEX alternative. Its trading competitions, sponsored by Binance Alpha projects, serve both as promotional events and as incentives to increase trading volume on the platform.
However, the apparent exploitation of contest rules through wash trading undermines confidence in these events and may impact future participation by traders and sponsors alike.
FinOracleAI — Market View
The revelation that half of PancakeSwap’s trading contest winners are interconnected through wash trading casts doubt on the fairness of its promotional events, potentially eroding user trust in the platform. This controversy could deter both traders and sponsors from engaging in future competitions, impacting PancakeSwap’s volume and ecosystem growth in the near term. Market participants should monitor how PancakeSwap addresses these integrity concerns and whether it implements stricter anti-manipulation measures.
Impact: negative
