Topic: The DeFi Red Flags (Read 400 times)

I would add

6) Meaningless copycat project created with the only idea of pump and dump.

I'm following the whole Announcements section and rarely I can see something worthy for my time or coins.

True. If you have joined one, its like you have seen it all. Although there are different kinds of defi like lending, swapping and synthetic assets, they are all connected when they all meet on each roadmap they have. But what is alarming though is the defi scam projects because they are swarming the space.

We can see their websites are just too simple that it doesn't have anything in there. No github nor documentation and if this is how they make it transparent, I don't think it will really be legit. Some of them will just stay for awhile before running with the funds.

My problem with this DeFi's remains the copy and paste of idea, new DeFi that are coming into the market are almost with the same idea, you wonder what's unique they bring to table for investors.
The part I dislike about DeFi is when team go anonymous, why hide if you're sure about your idea, come to front and raise proper funds, if you are once an influencial, either ICO, presale or IEO way, funds will be raise in short period of time or within minutes by whales if your idea is top demanding.

Please watch out for project with anonymous team, they are highly risky as anything can happen especially when they aren't properly audited.

https://coinmarketcap.com/defi/
Which top 30 projects will die soon. They have been working for several years or more and are successfully developing, as well as attracting investments from well-known cryptocurrency funds.

Messari analyst Mason Nystrom tweeted:
https://twitter.com/masonnystrom/status/1320751165244669953
"Last week Polychain bought 329 $YFI which equates to 1.1% of the total supply.

Yesterday, Three Arrows Capital purchased 133 $YFI (.45% of total supply).

Investing like your favorite investment fund has never been easier. View both of these fund's liquid portfolios below!"

Either you are looking at the wrong projects, or you are somehow disappointed in Defi that every message is written like a carbon copy.

^ I think projects related to decentralized finance are mostly scams and just want to take investors' money. Most of these (DeFi) projects have the same features and products as each other. So I think these projects will sooner or later die like ICOs.

Usually the biggest red flag is when the defi project is a giant mess of an existing defi clone. Its basically added with some unecessary gimmicks and call it feature.

There are too many such defi projects that just seems very obvious but people still falling into the same trap. Moreover, if the dev themselves is anonymous why bother putting a money into the project isn't that the most obvious red flag as of now? kinda baffles me when people investing to a project who don't even reveal who's behind it and complaint when they lose the money.

in fact, such a thing is perfectly natural. Scammers will continue to exist when something is popular. When ICOs in 2017 became popular and many projects were successful, scammers came and destroyed the moment. Likewise with IEO and DeFi. don't be too surprised.

Ninety percent of new DeFi projects are complete scam, if you are in for one just know that you are on your own, even few new DeFi projects intentionally hacked themselves and lied to the world that they are been compromised, it's time to be smarter, DeFi is giving scammers the freedom to do as they want

yes sometimes that's the cleverness of the scammers, they can place tokens in the best position and can get profit from traders or investors. so I think don't be fascinated by the word deFI because not all definitions are healthy

Nah,,, it was okay a year ago and also okay 6 months ago, but the scams were just as bad in those early times as it is now,,, maybe even worse in those times because a lot of early investors also lost money in March through makerdao crash remember? Now this is just ICO time again like before. Same scammers running and rinsing, and same greed making people lose money.

I agree projects must be audited by trusted companies like Hacken which has expertise in terms of security but other audit firms have always a culprit members look at AXION which edited by Certik and after launching someone from Certik team minted huge Axion tokens enough to drain liquidity in Uniswap worth almost $27m ,, https://cryptobriefing.com/axion-attack-inside-job-certik-says/ 

Absolutely! exchanges like uniswap are notorious for scamming and tricking. Since most of the projects are open-source, many build their own skin on top of a successful project. This caused the death of ICO and made the investors flee.

https://coinmarketcap.com/defi/
It is very difficult now to find well-known projects for which staking is still working.
Staking was invented as an alternative to the distribution of project tokens, which was not regulated by the Security and Exchange Commission.
But scammers started using this method to get rich quick.
Therefore, you need to learn to understand the reasons for which the project uses staking.

The team as well as the audit are the 2 factors that most determine whether a defi project is truly legit or not. Most defi projects are now smart enough to just create a github account, but only as a display. no repositories or projects are created on this github account, so be careful. and the team is the most decisive, lest a team whose origins are unknown promises strange or unrealistic technology

DeFi here DeFi there, it's definitely ICO round two this time around and by now I expected many investors to have understand that majority of these DeFi projects are just here to create unrealistic hypes to attract investors and end up stealing from them, the only decentralized Finance project I trust is ChainLink and few others

we need to start avoiding projects that gives people huge percentage on ROI and this is very common in DeFi projects nowadays, I'm surprised people are still investing money on such projects, it's so clear that such projects are running Ponzi schemes

Anonymous team members on DeFi projects can't be trusted, I'm sure they have a bad intent and once their target is met they will pull the rug, even projects with team members that came public still exit scam on investors money, if teams have something real to offer there is no need to hide behind the cotton

So much is happening in the world of Defi right now, so many rug pull on daily basis. Just like you rightly mentioned, fulfilling those conditions does not guarantee anything, I have seen project that had audit with reputable firm and still got attacked and price went to zero because of some lose end in the code, Defi is very risky generally and it is bound to get worse. Always DYOR.

Then you ain't see nothing yet, DeTrade fund exit scam and if you check their twitter account you will see video of the CEO talking about the project, many believe that the video is some kind of Artificial intelligence work, scammers are now using A.I to make unreal video appearance that looks real, this project raised 1450ETH and exit scam.

This meme token made it to coinmarketcap week ago and after checking the project out it looks like a pyramid scheme to me, just my own judgment though, giving out too high reward is always a bad news in any project, only greedy and inexperience investors will fall for such project

Given this one,because this is a old fashion move though still effective for the noobs.
and not just that,They are preventing from posting a lot because they might be Hooked from this,there are many investigator in social media and they will attract attention if being active .
Scammers willing to invest,Paying good writer to do this Job is not a big deal.
Well even big project now has a case of this one,but they have reasoning of course.
Good move of making this post as this DEFI is now coming closer to fading and soon dying.

The hype will end because the scam Defi project continues to emerge and it makes Uniswap only a token dump and also a temporary pump, as I have seen, for only a few hours the Defi project price will be pumped and after that dump, I don't see any real projects, almost a few the project will only waste money and it is very detrimental to happen until when only beginners in crypto who expect the Defi project to be able to compete and have a high selling value investing in the Defi project will only waste money.

The tips that the OP has posted will be a great help for those investors who are willing to risk their money in DeFi projects.
What he said is true. ICO is long dead and IEO are close to being dead too. DeFi is now the new hype and more things like this will happen in the future.

You know what is the best way for you not to get to these scam DeFi projects. You have 2 choices. Either you will invest into other coins like the ones at the top or don't invest into DeFi projects especially the new ones at all.

Good points, and definately something everyone should keep in mind.
Nowadays 9 out of 10 defi projects is either a scam, a rugpull or a money grab. Stay safe

But sometimes even if we do our part, we can still be deceived by these projects.
One section here that we can initially check potential scam projects is to look under Scam Accusations board.
If you will observe, a lot of DeFi projects are guilty with various issues and allegations.
Not only DeFis but all crypto projects in general. And since the hype now is in DeFi, scammers are using this as breeding ground for now.

Number 4 and number 5 is very important I have seen a lot of DeFi projects reported because of these two things Poor and/or plagiarised whitepaper and  Audits, getting audited is very important because this is a smart contract-based project, it should be checked if there are loopholes on the project and the smart contract will be used as intended to be.

Audit means nothing.
https://bitcointalksearch.org/topic/defi-hacks-history-5267124
If you look at the history of hacks, you will find projects there that have been audited.
I would not confuse scam and developer errors in smart contracts.
If you want to invest in DeFe projects, then see where Andreessen Horowitz invests
https://a16z.com/portfolio/
and other investors.

Scammers wont stop simply because they make money in this market and of course, we are still vulnerable. Every project has its own weaknesses, we have to see those before we invest to confirm its legitimacy. If you do invest without proper research then you can be a victim of scam project so don’t over confident when you invest, not all DeFi are worth investing for.

Three things that give me confidence to invest in a DEFI project include : well recognised team / reliable team with good project backings, good product or at least MVP, and regular updates. If these factors are absent, I look far away from the project. For projects that list on uniswap, I do check their uniswapinfo or dextools to ensure there is high liquidity, especially when locked for at least a year.

DeFi has its days numbered, but IEO has a little more to life.
Since it is valued even by major exchanges such as binance!
But what will happen when IEO stops being part of exchanges like binance?
It's very sad but scammers are winning...

DeFi is designed so that technicians can create "cloned tokens", which means that investors may not understand what asset they are investing in. It should be noted that technical difficulties may arise during transactions. As well as an impressive increase in the transaction fee, which is to pay for gas.

I think uniswap is the best platform for scammer.
It is very simple to list a token on uniswap. Just create a liquidity pool and contract. And it is listed.
First time scammer pump the price,  when investor come and invest then they dump tbe price continiously.

Everyone who uses Uniswap should remember that any tokens, including scams, can be placed on a decentralized exchange. Therefore, anyone who decides to buy tokens should conduct their own research before buying. Be sure to check the smart contract to avoid buying a fake token.

It is strictly necessary for an investor to execute a research of the listed red flags by the mere fact that it involves money and everything associated with it comprises a high-risk. Especially in these times, where defrauders are fabricating unusual ways to deceit the investors. A Defi project that contains one or any of those red flags should be avoided, especially with the information about the team and white paper simply because such information is relevant for an investor to make an effective investment decision.

People take advantage of you the first series of DeFi project to also decide to launch similar projects and we keep on seen numerous similar project. The most annoying thing is that most of them do not even have a properly developed platform. They all relying on integrating component such as yield farming, staking etc thereby causing unnecessary increase in gas fee on the ethereum blockchain. The issue of anonymous team has been existing for awhile now. It is very common to most of this scam projects. Some of them also make use of stock images which might be very difficult to search for the person in question on the web. Some of them are already moving to the BSC blockchain for faster and lower fee but many of them are already dead while some of them remain inactive

Meme tokens is a project created for fun there is no use case at all, vision, and progress about the project itself. But, because DeFi meme token coming again on our community with insane interest APY.

You can search Defi Meme Token on Google, I believe there already so many lists about these, and most of them exit scam

There are red flags in all other investment trend, ico, ieo sto and now defi, but i have seen some defi that have give good returns to the investors, the defi project that should be avoided or watch very closely are those ones without any team or have anonymous team, i don't understand the reason why they like to stay anonymous to begin with, probably they have something to hide.

therefore, I personally feel that more and more tokens are slapping DeFi on it popping up as if it's a sticky material that many people have come to believe in these weird tokens.

I myself am not at all interested in investing in the token you mention in the thread.

I hope it will end in some time.

What about the Emporium project! this is a clear example of a real scam project, what i think they did was to create  enough hype for the project so that people will trust and invest on it then they stop being active on the telegram group, they are only keeping their social media active to dump the last batch of the tokens before they zoom off
Defi's are bad news....

Lots of defi tokens are listed on uniswap, when the list price immediately went up drastically but after a day after a few hours it started to drop dramatically, and lots of new Defi projects that copied other projects, I think sooner or later defi will be like an ICO

What actually are those Meme Tokens

And another one "Meme Token"

There a lot Meme Token DeFi offering a thousand APY to all user, and you want know the weird things? everyone trade that token without fear the token going to be zero on the market.

ICO is stone dead(RIP) and IEOs are on its death throes. Now its Decentralized Finance season and everyone and his pet cat are launching projects, and slapping DeFi on it. I would be attempting to point out the points to look out for in scammy DeFi projects.

1. Fake/Non-existent team
It is an increasingly common trend for scammers to invent fake founders and biographies for their projects, and stick it o their websites. Some don't bother at all. Having said this, some legit DeFi projects have anonymous team members. This point shouldn't be a deal breaker though.

2. No or almost no social media presence: These projects can go days or weeks without any posts or tweets. That's simply because there is absolutely nothing to report. They are simply waiting to snap up your cash

3. Poor Grammar
One of the hallmarks of a scammy project is a hastily concocted whitepaper. Even with the Google Translate, the website, whitepaper and blogs are bloated with poor or elementary English.

4. Poor and/or plagiarised whitepaper
This one is a no-brainer. From copied whitepaper content, blog news these guys copy content from successful projects and gleefully slam it on their whitepaper. Many times they are successful with this ruse.

5. Audits
I have made it a point of duty to always check if any DeFi project I associate with has an audit with a reputable and well-known firm. Audits simply mean if there actually is a real project and whether such tokens exist.

Final Thoughts
Never take my word as gospel. Some DeFi can still exit scam or rug pull even after fulfilling these conditions. Remember: ALWAYS DYOR