The Real Risks

If Balloonsville got you…Jesus.

NFTs aren’t a giant Ponzi-Scheme and nor are they a worthless jpegs — not all of them at least. I’d describe them as the Wild West of web-development and venture capital . So yes, I’m bullish, and packed full of complimentary words to describe the ecosystem.

There are just two glaring problems.

Here’s the first in colourful english:

It’s a scammer’s wet dream.

I’ve never seen trust so low since joining the space. Finally, amidst all the gravy being sloshed around, many are coming to terms with the honest definition of the word decentralised.

Decentralisation, can guarantee the freedom to create, transact and interact. However so enamoured by these concepts, many forget this applies to scam artists too. Additionally, it occasionally slips the mind that, this means:

(A) Non existent consumer protection

(B) The good old adage, ‘survival of the fittest’ applies, in earnest.

It really is the Wild West. For those not plugged into this asset class, it is one of the few that has grown despite the economic backdrop & more interestingly, the crypto bear market. The phantom wallet (one of a few wallets used to transact in , exchange and purchase NFTs in the Solana blockchain) for example has grown from 200,000, to 2 million daily users.

Since August.

So let’s now explain the problem…the rug problem.

What is a rug/rug pull?

Encountering a ‘rug’, ‘getting rugged’ & ‘someone pulling a rug’ all describe the same process of getting scammed in NFTs. There are two typical categories of rugs. The slow pull that makes the majority and its bloody rollercoaster of a cousin, the hard pull.

The Slow pull.

Picture a thief slowly pulling the rug from your feet while you’re distracted and running off to make a sale in his local Bazar.

A slow rug pull, is a project that — having successfully sold a promise (to deliver on a published road map) — under-delivers and eventually has a team of ‘developers’ jogging off with bits of your money until there is nothing left. Eventually pretences drop and, in light speed, they disappear.

Naturally signs of this taking place creates a selling frenzy, nuking the NFT’s listing price on secondary (the eBays of NFTs), ruining your month along with your holdings. To be frank, I’m going to be bold and claim this to be 70+% of all projects, and growing, launched on the Solana ecosystem. Everyone here is more than familiar with it (don’t lie, it counts), and this has manifested in an overarching trend of impatience with holders, many now trading off volume instead of the project itself.

Giving my experiences in these seem unnecessary to me, but let me know if you want them in the comments (soon to be bustling, I know!). They are so common and demoralising that many, me included, have long favoured the flip and dip approach on hyped up projects.

Now let’s talk about something a bit more exotic.

The Hard pull.

Now picture a thief convincing you to stand on, and promptly removing a rug from your feet so that you crash head first onto plywood.

These can be hilarious to watch and mind-numbingly rage-inducing to be a victim of.

To put it simply, a hard rug pull sees you mislead into believing a project is viable, and even worse, the scammer makes this ABRUPTLY & ABUNDANTLY clear.

Here’s the best I’ve seen, which happened less than a week ago. I lucked out missing this one. Soon after it sold out, I was well informed the roadmap was incredibly dodgy, ‘as if written by a child’…

This gem of a tweet shortly followed.

Doodled Dragons being another hard rug pull orchestrated by the same group of people, this group walked off with around half a million dollars. MagicEden, a secondary market that had some responsibility for advertising it, set out to refund those effected and contacted the FBI. No joke.

…

Unsurprisingly, new projects are paying the social costs of these bad actors, with many having to quell expectations among holders to “Dox” or instantly deliver on multi-month plans.

PTSD folks. Fear, uncertainty and doubt.

Moderating a discord channel of intelligent yet paranoid (and handsome) people is now a fairly well paying side-hustle, and deservingly so.

So…what’s Doxxing?

Here’s a story and a half, where its destructive power can be fully illustrated.

A thousand people, me included, buy ‘NFT X’. This NFT promises to fund a business to business data analytics start up, which effectively helps small and medium sized business affordably subscribe and analyse their sales, user activity and other traces of data to make informed management decisions.

‘NFT X’ also claims to be legally exchangeable for shares in this company post IPO, for a discounted rate corresponding to the rarity of the NFT bought.

Finally, one of the developers was fully Doxxed, ie his general location, his name and his past University (a well known one) were all attached to the project and fully visible to the public, not bad, right?.

Wrong this time. This capital M-Moron, began to underdeliver on his timeline, skip AMAs and withdrew $130,000 while taking down parts of his LinkedIn, Twitter and eventually the whole blooming discord where all the holders were panicking. He also left a collection of freelance workers unpaid for months of work. No joke.

So what could be done?

Usually you’re forced to swallow the rage, jot down some lessons, and move on. But due to some lovely doxxing, I had a unique privilege of choice. Lick wounds or get revenge. In hindsight it was obvious, and we Blitzkrieged the hell out of some lives.

Joined 4 other degens in targeting one of their jobs, courtesy of LinkedIn. He was fired and taken down from the company website (lmao). Add to this some emails I took part in drafting and sending, bluffing pursuit of legal action and a press release, “requiring a statement from the University” (lmfao they wanted it settled ASAP), his personal social media accounts getting harassed, and his friends being sent files of proof that there was was indeed some scamming taking place by a mate.

A couple bluffs, and paying a Bulgarian freelance detective on fiver some dollars later, low and behold, he returned to the table.

I managed to successfully negotiate a settlement with one of these idiots that, although did not help everyone, got a couple others and I the hell out, with our money back after a few promises on our end.

Unfortunately, turns out these promises may be a pseudo NDA (we virtually shook hands 🤝), so I’ll skip posting some hilarious screenshots or disclosing its founders identities— just to be safe. Though message me if you want a cheap laugh, I’ll happily blur out the names.

Alas, who knows if the written agreement on a discord server translates into Singaporean law, let alone where I am situated … whoopsy doo…

Wrapping up

Macro, I see Solana licking wounds and growing up. More people than ever are selling trash at losses, not buying trash at all, or buying more quality projects. The hysteria over the last 60 days — which I’ll term the “Flippening” — is cooling off, and this month has been a wake up call for us all.

I think the solution is already surfacing. The community needs to do their own — and more in depth — research.

There is no avoiding getting scammed, it’s the Wild West remember?

But, if you can make your wins punch hard, and losses barely sting, it is a mathematical certainty this ecosystem will rain crypto-flavoured blessings all over your wallets.

And unlike 70+% of this space, Mathematics never lies.

P.S. I’ll do a separate piece on the second glaring problem.

Here’s a hint : “It’s another Pasta…”

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