Brothers participated in the ELK project some time ago. Since I paid close attention, I found that it is a wolf in sheep's clothing. There are many NFT projects, and even more with accompanying token shares, but I have never encountered such a disgusting project. It's a blatant scheme to harvest retail investors, with specifications changed repeatedly, and they are already in talks with exchanges to prepare for harvesting. Is there really no bottom line for exchanges now?

The 'Genesis NFT Pass' launched by the KLK Foundation appears to be a way to give back to the community, but in reality, it hides multiple risks. This article will expose the ugly operations behind it based on project rules, user feedback, and on-chain data.

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1. False Prosperity: Project parties monopolize NFTs to manipulate the market. According to KLK's card collection rules, users must hold a specific NFT set (AED, EUR, GBP, USD) with a quantity greater than 20250 to participate in the airdrop.

However, aside from the 20250 whitelist addresses, only 2000 were minted publicly from March 3 to March 6, and by March 7, the project party had minted all their own insider holdings. The addresses meeting this threshold are highly concentrated and mostly controlled by anonymous addresses of the project party, suspected to be retained by the project party. This design is essentially a game of 'robbing Peter to pay Paul':

1️⃣ Airdrop rewards flow internally: The project party easily extracts a large amount of KLK tokens through self-held NFTs, which are then sold off, causing the token price to plummet, instantly devaluing the tokens held by retail investors.

2️⃣ Creating an illusion of liquidity: By controlling the supply and demand of NFTs, the project party creates a false impression of a lively market, luring users into buying at high prices. Ultimately, these NFTs may become 'air assets', leaving retail investors with nothing.

This kind of tactic is reminiscent of the notorious Ponzi schemes in history, such as PlusToken—using internal manipulation to create false value and harvest external investors.

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2. Rules as a Blade: Arbitrary amendment of terms to harvest users. The KLK Foundation has repeatedly emphasized 'adjusting rules based on community feedback', which in reality exposes its unilateral control rights:

1️⃣ Diminished rights for whitelist rounds: Early participants were told they were 'no longer qualified to participate in future lotteries', with previously promised rights arbitrarily stripped away.

2️⃣ Ambiguity in public round rules: The project party claims 'new rules will be announced later', leaving a backdoor to subsequently raise withdrawal thresholds and lower profit ratios.

This 'changing orders' model is essentially the project party testing the limits of users: initially attracting with high returns, and after the capital pool expands, locking users' assets through rule adjustments. For example, a certain DeFi project 'Squid Game Token' modified its rules overnight, leading to the token's value plummeting to zero. KLK's tactics are highly similar.

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3. High-risk Signals: Malicious addresses and pyramid-like chain reactions further corroborate the risk:

1️⃣ Malicious address marking: Users are warned during transactions that '0x2364...47ae is a risk address', which is linked to KLK's activity contract, suspected to be a reserved backdoor or money laundering channel.

2️⃣ A hidden referral model: Although 'invitation rewards' are not explicitly stated, the rules require users to hold an NFT set (requiring a large amount of capital) and imply 'future benefits', effectively encouraging users to bring in new participants, forming a pyramid structure.

These characteristics are completely consistent with the collapsed project 'Forsage'—the latter touted itself as a 'smart contract', but was essentially a Ponzi scheme that ultimately ran away with the funds.

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4. Straying from the Spirit of Web3: A highly centralized scam.
The operations of the KLK Foundation completely deviate from the decentralization principles of Web3:

1️⃣ Centralized NFT issuance rights: The project party controls core assets (NFTs greater than 20250), and users are completely reliant on their rules for survival.

2️⃣ Smart contracts not publicly audited: The risk exposure of malicious addresses suggests potential vulnerabilities in the contracts, yet the project party has not released third-party audit reports, casting doubt on the safety of user assets.

3️⃣ A true Web3 project should achieve fairness through code transparency and community governance, while KLK operates under the guise of 'innovation' but practices 'centralized control'.

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The future of Web3 should be about technological innovation and community co-construction, rather than a slaughterhouse where scythes are wielded. Only by maintaining rationality and independently verifying can one safeguard their rights amidst the waves.

Conclusion: How to avoid becoming the next 'leek'?

The case of the KLK Foundation is not an isolated incident, but a reflection of the chaos in Web3. New investors need to be wary of the following characteristics:

1️⃣ High return promises + complex rules: All projects that promise 'easy wealth' are essentially traps.

2️⃣ Address risk + rule ambiguity: Always check the safety of contract addresses and the transparency of rules before trading.

3️⃣ Centralized control + abnormal data: Concentrated distribution of on-chain assets and anonymous project parties should raise alarms.

Remember: when the rules are written by the house, the game is destined to have no winners.

#Web3