Uniswap is not always rainbows and unicorns — here’s how to recognize a Uniswap scam

Uniswap is a massively popular decentralized exchange. It gives the permissionless possibility to launch its own crypto project with Ethereum token, get listed on its decentralized exchange, provide liquidity for token swaps, and get into the crypto world for FREE. With that, there are also opportunities for retailer buyers to buy projects early and get excellent returns for a low price (just like the way some of you have bought BBANK on Uniswap).

But then, enters SCAMMERS!

Scammers know many crypto newbies are willing to try their luck, buying new and unknown tokens before they increase tenfold!

They offer new tokens on Uniswap in buckets. Usually just creating a new smart contract with some crazy name and providing liquidity for it until they catch few unlucky people who will try their luck and lose some ETH.

We noticed a couple of scam project examples on Uniswap that went by the name:

• Kylin.Network( KYL)
• solv3.network(SLV3)

Let’s look at Kylin.Network (KYL) project as an example

• When we found out the Kylin. Network (KYL) project, we went under the Transactions section, clicked on Adds — this is where liquidity was added.

• Then under Swaps, we saw a few unlucky people trying to get early and giving their ETH to this new project.

• After they catch few Ether worth of value they had pulled out their liquidity. This was seen in the Removes section.

“Farming” out people’s ETH in this popular move is known as the “rug pull”.

If you are wondering why do they remove liquidity so quickly, it is because if those people who invested get doubts, they could sell back those tokens for ETH and remove scammers’ gains, so it is easiest for them to remove liquidity and just move on to the next project.

In the end, you will be left out with this kind of screen, showing 0 liquidity, with you being unable to sell these tokens.

Remember, don’t be fooled by the high liquidity of projects. Some of these scammers may have 100+ ETH and then pull the rug.

Even having a website and pretending to build a Telegram/Discord community has happened before. But lately, with the amount of new “projects” coming to Uniswap, they don’t even bother with that. They just create a new token, steal some ETH and move on to a new project.

Scammers are also getting cheeky

They are even mocking their victims with projects named Degenerate Platform.

Even then, people with FOMO go in and buy those kinds of projects and lose their ETH.

There are also some other plays, for example where scammers resurrect old projects from the last ICO 2017 craze

Those projects will have some history, website, and “some legitimacy” but all these scammers do is buy loads of tokens for cheap, pump up the price and sell slowly to new people at higher prices until they run out of suckers or tokens to sell or do the same rug pull fast.

For example,

You may come across tokens with names like other popular projects like Zilliqa.

This one got some people into it ending in similar scenarios. Then there are projects that combine some popular names of other projects and people might put some eth into them as they sound familiar.

What can be done?

We really cannot ask the authorities to catch these scammers, although it is seen that some of the ETH provided for these “projects” are coming from exchanges like Binance. As a result, some of them could be caught on KYC.

The thing that could be done is education and information. Another thing would be that Uniswap adds the option of locked liquidity in smart contracts, so projects would have a timeframe in which liquidity cannot be pulled out. That way, Uniswap would lose some of the scam volumes but would make it a nicer and much less dangerous environment for the crypto newbies.

Lastly, always do your own research before getting involved in Uniswap trading. Be crypto smart and crypto safe!