The following frequent scams ought to be on the radar of every DeFi trader, despite the fact that it is difficult to completely stop cryptocurrency fraud and theft in the entire market, as reported by Cointelegraph.
In the DeFi realm, rug pulls are likely the most frequent cryptocurrency scam, but they can also be one of the simpler to recognise for those who know what to look for.
Promoting what seems to be a groundbreaking, exciting enterprise is known as a “rug pull.” They attract support from the public and amass hundreds of thousands or even millions of dollars from investors, as reported by Cointelegraph.
It can be simple to detect a ruse from a mile away by observing a developer’s interactions with their communities and their token distribution strategies. In the absence of any mention of a token lock-up period, particularly one for developers, these teams are free to do whatever they want with tokens at any time, Cointelegrah reported.
To stop developers from stealing money, it’s best to connect with projects that have certain token lock-up periods. These initiatives will often be very transparent with the community, with regular updates and a long-term strategy. (While not exclusive to DeFi, a rug pull and a pump and dump scam are extremely similar.)
A project that has been deemed “unruggable” means that the development team has not made a significant token contribution. For instance, if a project lacks the significant feature of team-held tokens that may be seized in a rug pull or departure scam, it may be deemed unruggable.
DeFi phishing is typically carried out via email, with a malicious party posing as an official from a trade platform or protocol. A con artist will invent a mistake like “your account has been compromised. Send us your password and email so we can safeguard it. These strategies may involve demanding money from the victim or requesting their wallet passwords and addresses.
Phishing emails may contain links to bogus websites that look like legitimate platforms, luring victims to enter their personal data only to have it stolen by the con artists.
(With inputs from Cointelegraph)