Original｜Odaily Planet Daily (@OdailyChina)
Author: Wenser (@wenser2010)
ZKasino, the "Rug Dump" that once swindled more than 10,000 ETH, has returned to the public eye. Unfortunately, the project has not refunded the funds in the foreseeable future, and instead used the user funds to buy ETH and successfully made millions of dollars in profits.
In the previous article (Revealing ZKasino: From a "valuation" of $350 million to a "soft run" with 10,000 ETH), we introduced the project in detail. Now, the latest progress has been made, which can be regarded as a phased conclusion.
Odaily Planet Daily will follow up on ZKasino's recent situation in this article for readers' reference.
Rug appears again: this time it chooses to go against the trend and go long on ETH
As the Rug disk that "absconded with funds" before, the ZKasino project issued a statement at the end of May that it would refund users; but until August, the 10,515 ETH deposited by users were still located in the following two addresses:
0x42dc91caa486a1cbf921a8009404a590414285a3（5271ETH）
0x0ab4a19ab20bd1dde51a5d302721fcc30f34094d（5266ETH）
Previously, ZKasino had deposited the assets in Lido to earn interest, and redeemed 10,536 stETH (worth approximately US$31.56 million) for ETH in mid-May, earning 22 ETH in interest in 25 days.
As the victims waited day after day, more than three months later, ZKasino finally took action on the assets again. This time, they chose to go long on ETH.
A 20-day “long ETH bet”
On November 23, according to monitoring by on-chain analyst Ember, ZKasino misappropriated user assets and began to go long on ETH on the chain. They deposited 5,270 ETH into Aave as collateral to borrow 11.589 million DAI, and then bought 3,500 ETH.
Later that day, the Rug project borrowed another 8 million DAI to buy 2,301 ETH. At that time, it had borrowed a total of 19.589 million DAI from Aave to buy 5,801 ETH, with an average price of $3,377.
On November 26, ZKasino continued to leverage and deposited 5,265 ETH stored in another address into Aave as collateral to borrow 12.348 million DAI and buy 3,515 ETH. At that time, all user assets of up to 10,535 ETH were deposited into Aave as margin, and a total of 31.937 million DAI were borrowed and 9,316 ETH were purchased. It is understood that the average price of ETH purchased with this leverage is US$3,428.
Not only that, although the market was still pessimistic about the price performance of ETH at the time, the ZKasino project team clearly held the opposite view and demonstrated their bullishness on ETH with practical actions.
On the 26th, the ZKasino project continued to increase its position, borrowing 12.38 million DAI from Aave through a revolving loan to purchase 3,723 ETH. In summary, the project used 10,535 ETH belonging to users as the basic margin, borrowed a total of 31.937 million DAI from Aave, and purchased a total of 13,040 ETH, with an average cost of approximately US$3,402, which was a floating loss at the time.
Just when everyone thought ZKasino was playing with fire, the price trend of ETH quietly changed.
ETH Price Trends
On November 27, the price of ETH fell below $3,300. According to OKX market data, ETH fell to a low of around $3,250 that day; but then, within just one day, the price of ETH rebounded rapidly and quickly broke through $3,600, once approaching $3,700.
On November 28, according to the monitoring of on-chain analyst Yu Jin, the ZKasino project continued to lend 9.36 million DAI to purchase 2,603 ETH; a total of 53.77 million DAI were lent to purchase 15,645 ETH, using leverage to buy more ETH, with an average price of $3,437 for ETH bought through leverage. At that time, with the sharp rise in ETH, the ZKasino project misappropriated users' ETH as margin leverage to buy more, with a cumulative floating profit of $3.22 million.
At the end of the story, Rug ZKasino did not suffer from leverage liquidation as many users expected, but instead got away with it safely as they wished.
Just today, the ZKasino project team chose to end the ETH leveraged long position. It sold the 15,005 ETH bought through leverage and repaid the loan, earning a profit of 651.5 ETH (US$2.37 million). Subsequently, the 10,535 ETH belonging to the user and the long position profit totaling 11,186.5 ETH (US$40.75 million) were dispersed and transferred to 9 addresses, and the incident was once again deadlocked.
What follows is a question: Can Rug trading really make money forever?
The secret of making money with Rug disk: using market attention to gain profits
After this incident, we can clearly see that making money on Rug is a one-sided "profit harvesting". The main reasons are:
The first link is the harvesting of liquidity from Rug. Just like many Rugs that harvested liquidity through “donation collection” during the Meme craze, ZKasino is also a member of the notorious group that harvested liquidity. Others include VT of the BNB chain, Maji (Huang Licheng) of the Solana chain;
The second step is to harvest the staking interest of Rug disks. After completing the task of "user principal is the source of profit", the second step of profit-making adopted by these Rug disks is to rely on staking interest-earning agreements in different ecosystems. ZKasino chose Lido, and Maji previously chose the Solana ecosystem staking agreement BlazeStake.
The third link is the leveraged trading of Rug. This link is more risky, but the yield is also higher in many cases. ZKasino's leveraged long ETH is a good example. With more than 10,000 ETH, he achieved a currency-based return of more than 6% in just 20 days. Although there is a certain retracement compared to the high point, it can be regarded as a good deal.
In addition, since Rug trading usually involves a large range of people and spreads to a wide range of people, it is a natural "market focus", and to a certain extent, it has become a major factor affecting market price trends. ZKasino's leveraged long position was successful, and to some extent, it also benefited from the inclination of market attention resources to this event.
In view of this, perhaps one of the future market indicators will also be the movement of Rug funds.
