With the advent of decentralized finance, everyone has been given the opportunity to create their pwn pools independently, as is the case on Uniswap, adding value to their token by putting Ethereum (ETH) as collateral, not everyone knows that Liquidity Pools are often subject to scams. Uniswap appears to be plagued with scam tokens claiming affiliation with popular DeFi projects.
Considering that DeFi is experiencing a real explosion both for projects and millions of dollars locked, the industry has started to attract the corrupt actors of society, with criminals devising different strategies to deceive the victims to cash in on the DeFi Hype.
You Might Also Read:
One of the strategies to scam users is to create fake tokens of original projects and list them with liquidity pools on DEXs like, Uniswap, misleading those who buy a completely fake token but with the name of a real and famous project.
For example, A decentralized derivatives project, Opium took to Twitter on July 7 to warn users that a scam tokens called Opium and trading under the ticker OPM had been listed on Uniswap despite the project not having a native token. A similar scam token impersonating Balancer Labs’ then-forthcoming BAL was also identifies last month.
Another problem, more complex to detect, is the one related to backdoor created directly in the smart contract code of a project. When this happens, after placing assets in the pools, the users can have their funds stolen because the criminals can shut down the contracts and steal the crypto assets from them. In this case, the practice of yield farming is exploited, which grants tokens to those who provide liquidity to a particular pool.
Also, as pointed out by several users, in fact, there is a system called rug pull. Practically, those who put liquidity into the pool can at any time withdraw it and obtain a considerable advantage, although they leave users with a token that becomes worthless. One must be very careful and be wary of pools that do not have their liquidity locked because they may be subject to attacks of this kind.
And, it should be pointed out that as the tools in the DeFi sector evolve, tools that are sometimes only accessible to experts due to their complexity, one must be vigilant about the new techniques used for attacks andkeep eyes open at all times.
Scam tokens are a growing problem on the decentralized exchange and liquidity pool, Uniswap — owing to the protocol’s open listing policy.
In recent days warnings have been issued about scam tokens targeting four of the most buzz-worthy decentralized finance projects including Curve Finance, 1inchExchange, Tornado.Cash, and dYdX.
Stay vigilant and safe. Be careful
Nice dear