Identifying and analyzing web3 protocols with Ponzi scheme features

Abstract

This paper establishes a groundbreaking framework for pinpointing and scrutinizing web3 protocols that display attributes akin to Ponzi schemes. We meticulously define the defining features of these protocols and introduce sophisticated methodologies to assess their stability, fine-tuning their parameters, and crafting economic mechanisms to boost their sustainability. The robustness of our framework is vividly showcased through comprehensive case studies of two prominent web3 protocols: Safemoon and Ethena. In the Ethena case study, we take a step further by devising an advanced economic mechanism for automatic interest rate regulation, employing an innovative feedback loop system.