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Ponzi scheme Fomo3D – Self-experiment for a good cause.

!!! Warning!!! ‘Fomo3D’ is an insidious mixture of a ponzi scheme and a game with an apparent chance of winning. A lot of people will lose a big part of their stakes. There’s no doubt about that. This experiment is intended to educate and warn potential victims. All profits from the self-experiment will go to a good cause.

Directly to the experiment

Fomo3D – What it is

Fomo3D is a decentralized app (dApp) based on Ethereum. Depending on the angle from which you look at it, you can call it successful. The publishers of the dApp make no secret of the fact that this is a Ponzi or pyramid scheme. In a pyramid scheme, the earnings of “investors” are paid for by new “investors”. This goes well until there is no one left who wants to get in. At this point the whole system collapses. Such systems have existed for over 100 years. What is new is that there are now additional possibilities with Ethereum Smart Contracts. Pyramid systems can be started with any rules, without a central entity, who can be made accountable. The rules in Fomo3D are very insidious, because they cleverly address a series of human emotions and play them against the players. Among them are greed, the tendency to gambling, the addictive factor and Fear-of-Missing-Out called FOMO.

Fomo3D – the rules

  • New players buy keys.
  • These keys themselves have no value and also cannot be exchanged back.
  • A big part of the proceeds from the sale of these keys goes to those who already have them.
  • The more keys a player has, the higher is the potential “earnings” he gets.
  • The later a player enters the pyramid scheme, the more a key costs.

So far it is nothing special. This is how all ponzi or pyramid systems work, although not always so obvious. Of course, nobody wants to be in the lowest level of such a pyramid scheme (the last to enter). The trick with Fomo3D is that another big part of the revenue from the key sale directly goes into a jackpot. The last person to buy a key wins it! The jackpot is paid out when a 24-hour timer expires, but it is increased with each purchase! This leads to the following dynamics:

The devil takes the hindmost – NOT!

  • Everyone who buys keys early knows that they don’t have a chance to win the jackpot (currently several hundred thousand Euros), because the keys are still very cheap. You buy keys to get as much earnings as possible. They are supposed to be the top of the pyramid.
  • Nobody wants the timer to go down to zero and the jackpot to be paid out. So it’s going to be a while before they don’t find anyone to buy keys.
  • The timer’s obviously not going to go to zero soon. Therefore, many people will assume that they are not part of the lowest level of the pyramid system.
  • Meanwhile, key prices continue to rise.
  • Towards the end of the “game”, it is no longer a question of generating as much return as possible with the keys. Players now want to be the last to buy a key. The goal is to clear the jackpot, which will probably have reached an immense amount by then.
  • This also means that there will be people who will pay absurd prices for the keys. Their proceeds again benefit the other players.

By the way… the operators keep 2 % of the purchase price for each transaction. So they are interested in keeping the system running as long as possible. Since a smart contract controls the system, there is also no risk that the operators disappear with all money. In this sense it is not really a fraud or scam, but the whole thing is nevertheless insidious…

Fomo3D – a Self-experiment

I came across Fomo3D relatively early, a few days after the start of the Smart Contract. After a short research I was pretty sure that the system could develop an unbelievable momentum of its own as soon as it started to roll. When I saw on DappRadar that Fomo3D became one of the Top 3 Smart Contracts within a very short time, I knew that it could become the little (or big???) brother of Bitconnect (until then biggest cryptocurrency ponzi scheme).

I have no interest to enrich myself at the expense of my fellow citizens. Since I am relatively sure that I really belong to the top of the pyramid system, I have bought keys in a self-experiment and will donate all proceeds to a charity!

With this self-experiment I hope to achieve the following goals:

  1. I would like to achieve a good ranking for the term “Fomo3D” on Google with this page and thus warn many people about Fomo3D.
  2. If you disregard the great damage that this “game” will inevitably do for many, it is actually a very fascinating experiment and a convincing application for smart contracts within the framework of “permissionless innovation”. I would therefore like to record the course of events and perhaps an interesting story will develop.

Author’s note: Up to this point I avoided linking to Fomo3D. I don’t want anyone to find the game through this site and join without reading the article and knowing the dangers. However, the experiment also includes a bonus system for all those who recommend the game. So if you know the risk and still want to participate (for whatever reason), then use this link: https://exitscam.me/donotclick The 10% commission that is credited to my account will also be donated.

The “Endgame” – Reasons why most people will lose a big chunk of their stakes

Again, it’s a pyramid scheme! By definition, most users will be left empty-handed at the end of the round. Here are the reasons.

  1. Many will simply enter too late to get the stake out again via the “earnings”.
  2. Some will “reinvest” (*sigh*) their returns directly in keys, and thus also belong to 1st class.
  3. FOMO and greed win and you put too much into it after initial successes. Back to 1.
  4. Somebody’s gonna win the jackpot. But it is simply a raffle and the stakes will be so high towards the end that the stochastic expected value equals a lottery win.
  5. It is quite possible that towards the end the Ethereum network will be spammed by professionals, so that no one can buy keys anymore..
  6. There is a risk that the smart contract will be hacked. For comparison: The respectable Augur Smart Contract has taken two years to ensure the correctness of the code.
  7. There is a small risk that the programmers still have clauses in the smart contract with which they can withdraw all deposits themselves.
  8. The website could be shut down before the timer expires.

The experiment – my experience with Fomo3D

Day 0 – 13.07. Buy keys and understand the game

After researching half a day and seeing the jackpot rise to 450 ETH, I decide to try it myself. I have no interest in enriching myself at the expense of others, but I want to participate. For science! And if it works, I can donate the profits (or let’s say the “losses of the others”). I buy in for 3,6 ETH, about 1.300 Euro, 4.500 Keys. Actually I only wanted to buy in for 500 €, but FOMO strikes. Point for Fomo3D. 8 hours later my account balance already shows almost $100 earnings and the jackpot has risen to 580 ETH. What the heck?!?!! The timer’s still at almost 24 hours.

Day 1 – everything according to plan

After 24 hours I already have 0.36 ETH (150 $) in my account. This is a theoretical return of 10% per day. Check mate conventional investors! What could go wrong… This article has already entered the top 3 on Google for the term “Fomo3D” due to a lack of competition. I hope it stays that way and prevents a few people from “investing”. A few more statistics: – Current value of the Smart Contract: 1050 ETH – Users in the last 24 hours: 760 – Transactions in the last 24 hours: 1956

Day 2 – Doubts…

Was I wrong? Is the crypto community not so susceptible to greed and FOMO that they participate in such nonsense? Although my “earnings” continue to increase and now amount to 0.6 ETH (I am still missing 3 ETH, so that I at least have my stake back), a Google Trends Analysis shows me that the demand for Fomo3D is still limited. And also the metrics of the Smart Contract do not show a big growth for the time being even if the game is still ranked 2nd of the smart contracts with the most users according to dappradar.com . On the other hand, the timer, which can be set back 30 seconds for 0.001 ETH, is still at a full 24 hours. An end of the game is still a long way off. If I want my stake back, it has to be, otherwise I am in the lowest level of the pyramid system (I am player no. 1.451 of only 1.817, see here). Hmmm…actually a poor testimony for Ethereum that a pyramid scheme with only 700 users/day is the second most successful smart contract…

Day 3 – no unforeseen events

I did the math: with current key prices, only a good 3 ETHs per day of new capital is needed to keep the timer at 24 hours. At the moment, however, more than 100 ETHs per day are being added! My assumption that it will probably take weeks or months before this round is over is therefore justified. Meanwhile the first Youtube videos have been released, promoting the whole thing as a lucrative investment. I spend my time leaving a link to this page in the comments with my index fingers raised. My earnings continue to rise, but not so fast. Only 0.13 ETHs have been added since yesterday. This corresponds to a return of a downright ridiculous 4% per day.

Day 4 – it is worse than I thought

Until now, I thought everyone who played was aware that this was a pyramid system. However, the attention of users is directed so much to the jackpot that many claim it is a normal game of chance like roulette or the lottery. Even one of the inventors of Fomo3D has contacted me in the meantime because of my self-experiment and has tried to sell it to me as a lottery. But in which lottery do those who buy first have no chance of winning the main prize? The jackpot is certainly a lottery, but I am talking about the daily “earnings”, which were again a good 0.1 ETH on day 4.

Day 5 and 6 – 500.000$ in the Jackpot

Although only 20% of the proceeds from the key sale go into the jackpot, it has now grown to over 1000 ETH, equivalent to half a million dollars. The remaining 80% will continue to go mainly to the players who joined early. Because someone who spends 3.6 ETH, like me, doesn’t even get 3,000 keys nowadays due to the increased key prices. I still get approximately 0.1 ETHs in earnings every day. Unfortunatley humanity will not stop producing a greater fool every minute , so there will be more than enough of them throwing Ether at this smart contract, so that I will break even in 3-4 weeks. Oh by the way: I took a closer look at the code of the Fomo3D Smart Contract. Pretty impressive for someone who has no clue what he is looking at … 🙂

Day 7 – I can’t even…

Today we got a glimpse of what kind of damage this game wil inevitably do. Thousands of ETH worth of keys were bought. The jackpot tripled in a matter of hours. FOMO3D ist now the most successful Ethereum dApp by users and daily volumne. The new interest seems to be coming from Taiwan / China, where the search volumne for ‘fomo3d’ dramatically picked up speed:

Day 8 and 9 – When Lambo? I’ll make a few predictions:

  1. as already written several times: This FOMO3D round will run for months, if not years.
  2. Despite this, no one who enters now will get their initial investment out (except the jackpot winner). The reason is that basically the end game has already begun. Of course, there will still be lots of unfortunate people for a while who “invest”, because they have seen the “mad gainzz” that Youtubers report on. But for them to get their stake out, a multiple of the current volume would have to be added. By comparison: when I got in, Keys with a total volumne of just over USD 1 million were sold. I was break even at just under USD 10 million. Now the total volume is 40 million USD, which means that hundreds of millions more of capital would have to be added in order to introduce a new “lowest level” into the pyramid system.
  3. Because people will no longer make profits, the game no longer spreads virally
  4. However, the jackpot will attract some more attention. But the jackpot game is a completely different one. It’s no longer about buying as many keys as possible, but 1 key is enough for the jackpot, and it currently costs about 2 euros.
  5. The key prices increase continuously, but not with time but with the key purchase volume. Since this is becoming much lower, prices will rise extremely slowly!
  6. As long as key prices are relatively cheap in relation to the jackpot, the timer will not go to 0. I could imagine that the key that wins the jackpot will cost several ETHs.
  7. Another prediction is that this game will be a serious test for Ethereum: Because with a jackpot in the multi-digit million range it would be profitable for one or more miners with > 50% hashrate to buy a key and not let any more transactions through to win the jackpot. An unimaginable disaster for the system.

Meanwhile my oh so noble promise to donate all proceeds from the experiment is getting shaky. First, I suddenly feel less guilty of enriching myself at the expense of my fellow citizens when these fellow citizens are faceless Chinese (because Fomo3D is popular there). And secondly, the amounts have simply become very substantial. Money spoils character! Since I took out my bet, in less than 2 days almost 8 ETHs have accumulated in my account: $3,600

Day 10 & 11 – That’s it for now

It was already foreseeable, but now it is official: hardly anyone else is buying any substantial amounts. Good! Meanwhile, hackers have successfully withdrawn ETH from the Fomo3D smart contract. Not much, but enough to scare me into withdrawing all my funds. Earnings were only about 10$ per day over the last two days, so from now on I will report only if something extraordinary happens.

Fomo3D will likely never end!

If my assumption is correct that hardly anyone enters Fomo3D because of the earnings anymore the end game already started. This would mean that every day only as many keys are bought, so as to prevent the timer from going down to 0. This amounts to 24h*60min*2 = 2,880 keys per day. 2,880 keys currently cost 15.7 ETH. At this rate, the price of a key increases extremely slowly (0.00000045 ETH / day). This means that even in 50 years a key costs only 0.013 ETH. By then, however, the jackpot is already at 120,000 ETH. So it is likely that this game will NEVER be finished in the regular way. Translated with www.DeepL.com/Translator

Update Aug. 23 2018: The first round of Fomo3D is over!

At first it looked as if my above written prediction that the game would never end would come true: For days there were only a few minutes left on the counter, but enough keys were bought to keep it from dropping to 0. But then a player managed to shut down the Ethereum network for a few minutes with a clever attack. How exactly you can read here. That was enough to finish the first round of Fomo3D and to clear the jackpot of 10.500 ETH. But the next round started already one hour later…

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1

Hi, thank you for the analysis 🙂 what do you think of the quick version of the game ? This one seems more “fair” to me in the sense that it finishes in few hours (already round 4, and it was launched 15 hours ago). I would also be interested in an analysis of P3D, their other famour smart contract, which is more like a standard ponzi scheme. However it takes advantage of fomo3d and we also saw a massive rally on pow3d when fomo3d exploded in popularity last week end. I already derived the math of pow3d dividends, that are actually fair as long as there is volume (whatever the price of pow3d tokens, you still get approximately the same amount of dividends per token for each token that is traded).

2

Well, if there were a smart contract that could enforce it, I would bet you 3.6 ETH that you will never collect the funds =)

It could literally be a year or more until this thing ends… sounds like enough time for something bad to happen to the contract.

3
Withdraw early?

Hey, thanks for this post. I was also one of the lucky few who got in early enough to make a win. Not as much as you, but still… My question though: do you know what happens if you click the withdraw button? Of course, you’ll get your earnings transfered to your Metamask wallet, but what happens then? Do you keep your keys? Do you get as much dividens as before? I’m just wondering, because it would be stupid to let your earnings stay at the FOMO3D address, considering the possibility of it getting hacked.

4

Withdrawing does not affect your earnings or the amount of keys that you hold.

5

Promise to donate profits to sharity and then u cancel that. Thats very lame man. Basic idiot tbh like many ppl in crypto are, always promise and never deliver. Be a man.

6

Good thing you came by and showed me how to be a real man of honour. Also I said the promise is getting shaky not that I made the down payment for the Lambo

7
You're missing the point

The point is greed you fool, it’s literally an ironic remake of an ICO exit scam and outlines itself clearly as such.

Every cryptocurrency ICO does the same thing as Fomo3D, the only difference is that this one is programmed to let the last player take everything and run.

8

The problem is that the focus is completly on the jackpot even though only a fraction of the players will compete for it in the endgame when the tickets cost probably a couple hundred bucks.
Right now everyone is in it for the dividends. It intention doesn’t matter. It is a ponzi scheme not much different from Bitconnect and people will lose money with it!

9

I’ll have to disagree with that. It’s much more similar to Social security or stock investing than it is to Bitconnect. The “greater fool theory runs” a large part of society and experiments like this bring light to this issue.

There is only voluntary participation. The fee for development, design, hosting websites and providing customer support for thousands of people is 2%. And everything is transparent to the public.

It is what it is, but I find it funny how people are quick to call one thing a Ponzi scheme and blatantly ignore all the other more obvious Ponzis where billions are taken and often embezzled, mostly by the threat of prison for those who refuse to participate.

10

You are right, the fact that everyone knows where the money comes from makes it better than Bitconnect. They said they had some sort of trading bot who generated the dividends. And lotteries are much mor of a scam because they take 50% instead of 2%. But the dividend part of FOMO3d is the very definition of a pyramid/ponzi scheme. You could argue that you “gamble” that you are not the lowest level of this pyramid but it still is a pyramid scheme

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