The Story Behind 1.16 Million US Dollars Spent On Failed ENS Token Claims

The Ethereum Name Service announced their governance token $ENS on November 8 and they airdropped 25% of it is 100 million total $ENS tokens to their users. Here is the breakdown of how 100 million ENS tokens are distributed

• 25% airdrop to .ETH holders (>137k accounts)
• 25% to ENS contributors (>100 individuals and groups, plus hundreds of Discord users)
• 50% to the DAO community treasury

Participants who registered a .ETH domain before October 31st 2021 are eligible to receive 25% of the total supply allocated for the $ENS airdrop. ENS Airdrop captured a lot of attention this year as one of the biggest airdrops. Media attention and social media buzz resulted in all eligible users rushing to claim their ENS tokens worth up to four or five figures. Many of the transactions that were made to claim the tokens failed and a total of almost 11 million dollars were spent on the failed transactions. In this post, we will examine all of the failed ENS Claim attempts. 

What Would Cause ENS Token Claims to Fail?

ENS Tokens are distributed on the Ethereum blockchain, one of the most active blockchain networks in the world. There are several reasons why Ethereum Transactions (ENS token claim transactions) could fail. Human error is a factor in some of them, while the immaturity of blockchain tools is a factor in others. Here is a list of reasons why ENS token claims could fail.   

1. Merkle proofs are invalid – ENS Contract uses Merkle proofs to verify claimTokens transactions. The transaction will be rejected if the Merkle proof is invalid and someone tries to spoof or defraud the airdrop claim process.
2. Tokens already claimed – This error occurs when a user tries to claim tokens that have already been claimed. There are several reasons why someone would attempt to claim an airdrop that has already been claimed. The two most common ones are:
   1. Blockchain UX: Although we have made great strides with the usability of blockchain apps, many experienced and highly technical users still find it difficult to navigate the ecosystem properly. Due to the lack of clear UX, users try to claim tokens that have already been claimed.
   2. Human Greed: Some users are greedy and search for exploits. The users claim airdrops repeatedly, but with contracts like ENS that are robustly audited, they have little or no success.
3. Out of Gas: One of the most common reasons transactions on Ethereum fail has to do with running out of gas. A transaction on Ethereum blockchain is aborted halfway through or as soon as the gas limit has been reached when there is insufficient gas to execute the transaction. Here’s a video that explains how gas limits work on Ethereum blockchain.

The following code block from ENS contract highlights the validations in place to handle scenarios listed 1 & 2 in the above list

/**
     * @dev Claims airdropped tokens.
     * @param amount The amount of the claim being made.
     * @param delegate The address the tokenholder wants to delegate their votes to.
     * @param merkleProof A merkle proof proving the claim is valid.
     */
    function claimTokens(uint256 amount, address delegate, bytes32[] calldata merkleProof) external {
        bytes32 leaf = keccak256(abi.encodePacked(msg.sender, amount));
        (bool valid, uint256 index) = MerkleProof.verify(merkleProof, merkleRoot, leaf);

        require(valid, "ENS: Valid proof required.");
        require(!isClaimed(index), "ENS: Tokens already claimed.");
        
        claimed.set(index);
        emit Claim(msg.sender, amount);

        _delegate(msg.sender, delegate);
        _transfer(address(this), msg.sender, amount);
    }

Successful vs Failed ENS Airdrop Token Claims

Let us now examine ENS Airdrop claims using data from the Flipside Crypto data warehouse in order to get a better understanding. Data indicates that a total of more than 106,000 ENS Airdrop Claim transactions have been executed on the Ethereum blockchain as of December 28th. Of those claims, 89.14 percent of those transactions were successful and users were able to claim their airdropped tokens. Furthermore, 10.85% of the transactions did not execute and as a result, users ended up spending unnecessary money on gas fees.

Weekly success rates are shown in the following chart. During the first week, there was a lot of rush to claim the tokens, and 6.55% of the claims failed. As of the end of the first week, the percentage of failed transactions has been between 2% and 3%.

There is no escaping the fact that transaction fees on the Ethereum blockchain are running hot since NFT-mania is clogging up the network. Due to these high gas fees, ENS Airdrop token holders were forced to spend more than 11 million USD in order to claim the airdropped ENS tokens. The following chart shows the distribution of gas fee spent on successful vs failed transactions. 
The failed claims consumed 9.95% (1.14 million USD) of total gas spent on claiming the ENS tokens.

Let us look at the breakdown of where 1.14 millions USD gas fees spent on failed transactions in the following chart. As you see in the below chart, 92.7% (1.08 million USD) of the failed transactions were due to insufficient gas provided by the users while calimining. As we discussed earlier, insufficient gas problem is very common on Ethereum blockchain and a significant user experience improvements are required to address this issue.

The rest 84,000 USD worth of gas fees was spent by users who tried to claim the tokens there were already claimed.

How Many Failed Attempts Were Made By Users?

These days, most humans are afraid to make a transaction on Ethereum unless they are whales. However, when free money is distributed in the form of Airdrops, users burn their ETH gas in order to get those juicy four and five digit airdrops. Here is a chart illustrating the number of failed claims made by ENS Airdrop claimants.

Approximately 95% of users claimed their airdrops at most twice irrespective of reasons for failure, such as out of gas or attempting to reclaim already claimed tokens. Of the remaining 5%, four users stand out who have made 10-20 failed attempts. During the claims frenzy, these users burnt their Ethereum in an effort to claim the tokens. 

The top 25 accounts that executed failed transactions are listed below. In the chart, the gas fees spent on unsuccessful claims are sorted in descending order.

One User Made 20 Failed ENS Claim Transactions In 2 Seconds!

One account that caught our attention while analyzing data of failed transaction is the owner of fineartphotography.eth ENS domain. This person made 20 failed attempts and you can view them over here on etherscan. The first claim transaction executed by fineartphotography.eth failed due to insufficient gas and then the second transaction successfully claim the tokens.

For whatever may be the reason, the user performed another 19 failed transactions in the span of 2 seconds (between 2021-11-10 07:08:45 and 2021-11-10 07:08:47) to claim the tokens that were already claimed. Performing 19 Ethereum transactions in the span of 2 seconds is not a human error. This should be a bug in the client used by the user and it costed the person burning 775$ worth of ETH gas.

Final Thoughts

The Ethereum Name Service airdrop is one of the more prominent airdrops of 2021 on the Ethereum blockchain. Tokens worth four to five digits of US dollars were given to eligible users. A closer look at the airdrop claims reveals that Ethereum’s ecosystem can be improved. In addition to high gas prices, usability problems force users to pay a lot for failed transactions. Imagine how helpful it will be if 1.16 million USD worth of gas fees are donated to Distributed Autonomous Nonprofit Organizations like Angle Protocol, instead of wasting them!