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I Woke Up in the Middle of the Night - Just in Time to Get Rug Pulled 🙈
Those recent days were really exciting for me. SmartBCH launched and with it came the first decentralized exchange (DEX) BenSwap and lots of new SEP20 tokens - which are tokens built on SmartBCH. Most of these tokens brought a lot of joy to the BCH community and beyond. Free airdrops were to be had everywhere - and making money seemed so easy: Just FOMO (fear of missing out) into the next new token as soon as you see it - and you will easily have 10x returns on your investment.
The SmartBCH excitement caught me so hard that I could hardly sleep those past two weeks. I wanted to check the prices on BenSwap every minute - and trade back and forth. It was a lot of fun.
This morning - or better yet: in the middle of last night - I woke up after half a night of comatose sleep. Still not fully awake I checked BenSwap and then ChartPro - the website which lists charts of all the tokens which are traded on BenSwap.
While searching for another token, a new token caught my eye. "Yearn Finance." The name sounded interesting and kind of familiar. I clicked on the name to take a look at the chart.
"Oh wow, the price is going straight to the moon! And the supply is very limited! And the market capitalization is really low! This is my lucky day! I will buy a small position and then do my research on it!"
Still not fully awake I extracted the contract address of the token from ChartPro, added the token to my Metamask and then hopped over to BenSwap to buy some.
Not everybody knows this, but you can actually trade all SEP20 tokens on BenSwap as soon as someone adds liquidity for the token. And BenSwap doesn't check the tokens before you can trade them. They don't check for quality, legitimacy or anything else. (And even after they are officially added to BenSwap, this is not a guarantee that the tokens have a legitimate team or use case.)
That is the beauty, but also the danger of DeFi. You are in control, but also responsible for your own actions. Nobody is preventing you from doing something stupid. And unfortunately, nobody prevented me from doing something stupid.
"Let's buy some YFI quickly... How much should I buy? 10 YFI? No, that's not enough. I will buy 100 and then sell some when the price goes up higher. The token has only been trading for about two hours! I will have plenty of time to sell my initial investment and see where the rest will take me! "
And without thinking about it too much, I just bought 100 YFI for a bit more than 0.02 BCH. "Now let's wait a bit..."
"Oh, someone else just bought 1000 YFI and pushed the price much higher. This is going great! I had the perfect timing to buy before the other person bought so much!"
"Let's check the price on BenSwap..."
"Oh. There is not enough liquidity to sell 100 YFI... Let's try to sell only 1."
The token creator removed all the liquidity after they took in enough BCH. I doubt that the liquidity will ever be added again.
This is what is called a "rug pull": I am left with worthless tokens which I will never be able to sell, because nobody wants to buy them. Therefore, there is no liquidity - and I was scammed out of my initial investment.
Of course, what I did was extremely stupid. Trying to get rich quickly is usually the fastest way to get scammed...
However, I wanted to share this experience with you publicly - as a reminder for myself of what happens when you buy new coins with 0 research - and also as a warning to you. This can happen to everybody.
In the Bitcoin Cash community it sometimes feels like we are all a big family. However, anyone can create an SEP20 token on SmartBCH. It doesn't take much time or money to do that. So please be aware of that. And don't buy new coins just because the chart looks like they are going up in price. And be especially careful with names that sound familiar. I fell for all of this, unfortunately. It was the first time - and I surely hope it will be the last time.
And here are all the swaps on BenSwap in YFI on SmartBCH - from the first one to the last one. I doubt that there will ever be another one...
Notice that my buy order was the second to last one. 🙈 As I wrote in the title, I woke up just in time to get rug pulled and lose my money. 🙈