7 signs of a scam project
Every day more and more people are showing interest in the amazing innovations of the world of finance that opened up with the advent of DeFi. For many of them, the main fear when entering the cryptocurrency niche is to fall for a scam project and lose all their money. Today we will see by which features you can recognize one-day projects and what’s the most important in a project you are going to invest in.
1. What is the purpose of the project?
Make sure that the project you are investing in brings something new to the digital economy. The innovative potential is very important in crypto projects because it ensures the future growth of the project coin. The project must have a unique value proposition that distinguishes it from competitive projects.
8.Finance is a MetaFi platform where you can easily play, learn and earn cryptocurrencies without any special knowledge. You can start with a simple free game Snake for Crypto, where you can collect cryptocurrencies on the playing field. Then you can withdraw them to your wallet and sell or use them in our other services to multiply tokens and explore the opportunities.
2. Are the creators anonymous?
The publicity of the project team and the creators of the coin is very important since anonymous teams are sources of increased risk. If an anonymous project turns out to be fraudulent, then the founders stay unknown as well. The situation changes radically if the whole team is public and the reputation of real people is at stake. Not all projects by anonymous teams are scams but the risk is much higher if we don’t know the founders.
In the 8.Finance project, we introduce you to the whole team, because people are our main value. We are always open to communication and can give feedback. 8.Finance has a support team that you can contact with any problem and proposition.
3. How are tokens distributed?
Knowing how tokens are distributed is one of the key aspects of a crypto project. There should be detailed information about all token holders, terms of lockup and vesting, distribution volumes. One of the most common crypto scams is when project teams keep a large amount of tokens for themselves, inflate its market value through aggressive marketing, and then sell a large amount of their tokens at once, dropping the coin to the floor. Thus, the project team is a big winner, and all token holders have huge losses.
The 8.Finance project has the distribution of tokens as open and public as possible. The threshold for entering the coin is minimal, and applications for Private Sell are accepted even for small amounts, and, of course, for applications for small amounts there will be no guarantee of receiving an allocation. Due to the lockup for 3 months and for a year for early investors and the team, respectively, the sellers’ impact on the price will be spread over time, which will smooth out price fluctuations. Decentralization of distribution is guaranteed by a huge share of distributed tokens — we sell 58% of tokens (35% public + 10% private + 7% seed + 5% seeding open sales). Only 3% of tokens are allocated by the team with the longest vesting of 2 years.
The data in this article has lost its relevance; see the current information in the gitbook.
4. Is there an exit-scam threat?
Most of De-Fi projects are involved in the aggregation of funds and the supply of liquidity, which is called Staking and Farming. Thanks to this feature, huge funds accumulate on the smart contracts of the locked liquidity tokens. With the help of pre-prepared or accidentally left vulnerabilities in the code, fraudsters can withdraw funds from these smart contracts.
To avoid or minimize such threats, check if projects have certificates from auditors such as Certik, PeckShield, Slowmist and Paladin. Be sure to check that the certificates are on the websites of these auditors, see the contents of the certificates. Because the presence of a certificate does not prove its security, the certificate can indicate that the project has many vulnerabilities.
For the 8.Finance project, the exit scam threat is minimal, since the project code does not contain backdoors for the hidden withdrawal of tokens — this will be confirmed by several independent large smart contract auditors such as Certik and Paladin at once. Also, before the release of the smart contract, 8.Finance will open a Bug Bounty program with a reward of up to 1 million USD, where everyone can take part in the role of a hacker and try to find a vulnerability in the contract. To provide additional protection for the staked liquidity, part of the funds will be secured using authorized and well-known Liquidity Lockers like Unicrypt.network and insured against scam using the ShentuShield program.
5. Is the tokenomics of the project deflationary?
Sometimes projects meet all the basic requirements of the market: they pass an audit of smart contracts and have high-quality code, but the project’s tokenomics is inflationary, which means that the price of a token can grow only if there is a constant influx of buyers. For investors, this is a high risk, since the competition in the market is very high and, as a rule, users do not keep their funds for a long time in one project. So, when even a small part of users are leaving the project, it drops the price. A drop in the price of the token will reduce the number of funds the team has for marketing, if they are provided for in tokenomics in the first place. Thus, the project falls into a financial loop and enters the “slow scam” stage.
There is no such threat for 8.Finance because:
- The tokenomics of the project has more than 30 tools for the redemption and burning of tokens to maintain and stimulate price growth
- The number of tokens is predetermined. The entire amount of it is fully released. Therefore, there will be no dilution of the emission. The number of tokens will only decrease, which will stimulate buying activity and their final cost.
- 8.Finance forms investment and reserve safes, which are guaranteed to provide the minimum value of the coin, which can be used for redemption or active marketing promotion of the project when the value of the project token falls.
6. What are the terms of registration and presale?
Pay attention to the project domain. You can check the details about it on any of the registration data checkers, for example, Who.is.
Typically, scam projects do not plan their existence for the long term, so they don’t reserve a domain name for more than a year. In this case, it is important to pay attention to the date of registration of the domain or its last change of ownership. If this date is very close to the date of entering the private and the public ICO, then most likely the project’s task is simply to collect money from gullible investors and safely dissolve with them on the Internet or follow the path of a “slow scam” without investing in the development of the project.
The 8.Finance domain was registered in 2020 and the last change of ownership was in July 2021, at the moment when the project team bought the domain from a cybersquatter (a person involved in the early registration of “unique” domains for resale). The domain reservation has been paid immediately for 2 years. At the same time, the project enters the private sale only in April 2022, which indirectly indicates the profound study of the project and the preparation of the team for such a crucial event.
7. What is the project budget?
This paragraph is a logical continuation of the previous one.
DeFi and NFT markets are at their peak. Many project founders expect to make money quickly with minimal investment, using the current hype. Usually, such projects are recognizable by a cheap web design, the absence of press releases in trustworthy media, and a wide advertising campaign. The domain name itself is long and cheap.
Of course, such a project will not always be fraudulent, but the chances of surviving in an overheated, highly competitive cryptocurrency market are very low. Due to easy money, advertising services and promotion tools in the cryptocurrency market are very expensive and a low-budget project simply will not have the opportunity to express itself. It will quickly get lost in the information noise and fall into a debt loop and inevitable bankruptcy.
8.Finance does not apply to such projects. Even before the launch of the private sale, the team invested heavily in the domen, (because we plan to develop the project for a long time) website and presentation materials, developed a brand book and marketing strategy, and enlisted the support of a seed investor for the long-term and safe development of the project.
So, in order to understand that the project really deserves attention and is not a scam, you need to study it in profoundly: pay attention to the website, presentation, tokenomics, study the ideas and goals of the project, get to know the creators and the team, find out the budget and other nuances of the project. Of course, all this does not give a 100% chance that the project will not turn out to be fraudulent or that it will shoot and bring you a lot of money. Remember, cryptocurrencies are a high-risk instrument. If you are ready to take on these risks and have the opportunity to earn 10 or even 100 times more than on a regular exchange, then we will be happy to guide you into the world of crypto finance!
Still have questions about the DeFi market, about the 8.Finance project, or want to take part in the Private Sale? Visit our website and get all the necessary information: https://landing.8.finance/
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