  Pyramid schemes are investment scams in which top-level participants in a
hierarchical network recruit and profit from an expanding base of defrauded
newer participants. Pyramid schemes have existed for over a century, but there
have been no in-depth studies of their dynamics and communities because of the
opacity of participants' transactions.
  In this paper, we present an empirical study of Forsage, a pyramid scheme
implemented as a smart contract and at its peak one of the largest consumers of
resources in Ethereum. As a smart contract, Forsage makes its (byte)code and
all of its transactions visible on the blockchain. We take advantage of this
unprecedented transparency to gain insight into the mechanics, impact on
participants, and evolution of Forsage.
  We quantify the (multi-million-dollar) gains of top-level participants as
well as the losses of the vast majority (around 88%) of users. We analyze
Forsage code both manually and using a purpose-built transaction simulator to
uncover the complex mechanics of the scheme. Through complementary study of
promotional videos and social media, we show how Forsage promoters have
leveraged the unique features of smart contracts to lure users with false
claims of trustworthiness and profitability, and how Forsage activity is
concentrated within a small number of national communities.
