Scams in DeFi are rampant, but you can avoid them with the right know-how and insight we provide.
There is a multitude of ways malicious people go about scamming DeFi investors out of their hard-earned crypto, however, most take the form of a “Rug”. The term rug refers to a fraudulent token in which the creators sell a vision to investors, only to run away with the funds that people invested.
Characteristics of a rug -
- Unlocked liquidity: Every single tradable token in DeFi has a liquidity pair, typically which consists of said token paired with stable coins, or the chains native token (Eth for example), which is what gives the token it’s value.
- Honeypot: A honeypot is a form of scam where a token is buyable, however, is not sellable. This ultimately captures investors' money indefinitely until the liquidity is unlocked and the developer can run away with the funds
- Mint Function: Although there are occasions where mint functions are necessary such as staking, farming, or reward protocols, mint functions can also be associated with
- Large Airdrops: Even if a token has none of these malicious characteristics, developers can still hold a large supply and send free tokens to separate wallets that take profit in an effort to hide their tracks.
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Easily diagnose airdrops with CoinScan’s premium airdrop interface
See exactly who was airdropped what amount of tokens, what the value is currently worth, as well as how much they’ve sold/ held onto in real-time! You can also sort the airdrops by amount, date, and amount sold.
Watch developer transactions in real-time as they enter the mempool, giving you the fastest information available to avoid scams.
See what’s happening behind the scenes withCoinScan’s real-time dev wallet tracker, showing you exactly what contract functions are being called with a mere 0.01ms delay.
With this tool, watch for the dangerous transactions mentioned above to make sure you’re staying safe! You can also frontrun these transactions if you’ve already bought the token.
