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VikingSwap Disaster – Why you should be careful of Degen deals!
While the launch of Binance Smart Chain (BSC) has been a great relief for retail investors who were feeling frustrated by the crazy ETH fees on DeFI platforms but it has also led to a Gold Rush situation where many people are blindly running after crazy APYs being offered by new platforms.
This is a great opportunity for scammers to start fraud projects just with the intention of luring unsuspecting investors with the greed of unimaginable gains. People know that APYs tend to fall with time so in a rush to get the best rate people join the pools in a hurry without doing proper research about the platform.
While this behavior is expected when people who were seeing 3% annual returns on Compound are shown 3% daily return they are bound to get excited, but we need to keep in mind that if something looks too good to be true then there is a high probability it is not true.
What was the Gameplan of VikingSwap Platform?
If you look at the landing page of VikingSwap it would be glaringly obvious that it was a simple copy paste of Pancake Swap. They did not even bother to change the structure of the site maintaining the same panel with options for Exchanging tokens, Providing Liquidity. They just renamed Staking Pools to Armory to make it more “Vikingish”.
They made it clear in their introduction post on Medium that they were inspired by the sudden popularity of GosseFinance as they were offering much higher APYs than Pancake.
Viking claimed they will offer even better rates than GooseFinance by copying their model and somehow making it a bit better.
While GooseFinance was offering a LP with Million% APY, they came up with a pool offering Billion% APY. They even got it listed on AutoFarm Network. I think this was the key reason why people decide to trust VikingSwap as many assumed that being listed on AutoFarm means it must be legit.
What Went Wrong with VikingSwap?
They started their first week since launch in full force and offered way better APYs than GooseFinance, their founder even tweeted that they were planning for collaboration with GooseFin. Things started going downhill from second week onwards when GooseFin offered Layered Farming concept and Viking could not copy this layering on their site. Their pools started to shrink.
The last nail came when the founder made this post on Medium saying they were not able to copy the Layered Farming code so they are shutting down. It was hard for me to decipher was their founder really that dumb as openly admitting that just because he could not copy a competitor he was closing down. Perhaps he was really shrewd and is just acting dumb. We will probably never find out for sure what was the reality.
As expected as soon as this post came up everyone rushed to sell off their tokens and LPs and the price started tanking fast. I had put a LP on AutoFarm of about $100 and by the time I was able to unstake the LP, withdraw liquidity and sell my tokens I was left with about $40. So in total I lost $60 and honestly I am not really bitter about that as I knew the risk and I always play with new platforms with small amounts which are anyways balanced by gains from other platforms.
I had lost money with many coins and projects before but that was due to market fluctuations, this was the first time I had been ripped off by a scam project.
$60 Lost but Invaluable Lesson Learnt!
Looking back I think $60 was a small price to pay for this invaluable lesson that even if a platform is listed on a popular DEX it does not mean it is legit, it can still be scammy. Also there is not harm in trying out small crypto projects as they offer best gains during a bull run but never make a move before doing proper research.
Be careful of Audit certifications as VikingSwap had a audit certificate by Hacken. This did not stop them from scamming people. What you need to understand is that Audit just checks the code for vulnerabilities for external attacks. This they passed as they copied the GooseFinance/ Pancake code which was already certified. However what this does not certify against is the exit scam planned by the owners who just dumped their share and deserted the site.
I am not saying all platforms that copied Pancake are bound to scam or fail, afterall even Pancake copied SushiSwap and is doing great and infact even better than Sushi now. You just need to be careful with the new projects that are propping up and do not invest in Degen deals more than what you can afford to lose without worrying about it the next day.