Sketchy Smart Contract Behavior Spotted on Ethereum Ecosystem

Sketchy Smart Contract Behavior Spotted on Ethereum Ecosystem

The Ethereum blockchain is likely the most popular one for the creation of unique technologies, platforms, and smart contracts within the cryptocurrency community. Consequently, this ecosystem sees the highest volume of developers and contracts of any of the main platforms which allow for the facilitation of blockchain technology.

But recently, some analysts have noticed a sharp increase in the number of smart contracts being placed within the Ethereum ecosystem. Additionally, it appears that many of these contracts are suspicious in nature. Though it is speculated that very little actual damage has been done within the massive ecosystem, some argue that these suspicious contracts are a cause for concern, and should be approached with caution and skepticism.

The Year of Smart Contracts

Smart contracts have become the mainstream within the Ethereum ecosystem. The platform has always lent itself to the integration of smart contract technology, but the past year has yielded more interest in the tech than ever before. Smart contracts allow for maximum automation and the highest efficiency within blockchain-based organizations, and have become a favorite of larger startups looking to increase their output of financial product.

The recent increase to smart contracts may not seem like a big deal initially. In fact, someone who understands the importance of the technology may even be excited that more companies seem to be using smart contract technology to innovate and expedite their own businesses within the busy Ethereum ecosystem.

A Single Abnormality

But research from the security firm “RatingToken” has yielded a much more concerning conclusion regarding the source of the recent spike in smart contract execution on the Ethereum network. The firm found that a single Ethereum address has been the source of a significant amount of these contracts.

This one Ethereum address, by itself, has created over 10,000 smart contracts—12,000, to be exact. Even more concerning, perhaps, is that every one of these contracts is functionally identical to the others. This means that one address on the Ethereum network has created 12,000 of the same smart contract.

This has already created problems on the Ethereum network. In addition to causing a small increase to the network fees for transaction applied to users, analysts are beginning to question why exactly someone would attempt to create so many nearly-identical smart contracts. It certainly is not a disjointed effort; RatingToken found that the contracts are organized professionally, and that there was over 20 Ether paid in fees alone to create the contracts.

Probable Causes

The most likely cause for this abnormal behavior is unfortunately nefarious in nature. The security firm speculates that the only viable reason that a company would want to create so many identical smart contracts would be to spam the network. If this is the goal, then it has somewhat worked; the creation of so many contracts caused a marked increase to user transaction fees on the Ethereum network.

It is also possible, though unlikely, that the creation of so many contracts is part of a larger, long-term scam using Ethereum and its delicate ecosystem. Over $600,000 in Ethereum has been transferred to an anonymous outside account, which could be evidence of a sketchy undertaking. However, it is unclear at this point in the process whether this is a simple attempt to spam the network, or if it might be part of a more sophisticated scheme.

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