How to Avoid Buying Uniswap DeFi Scams in 2021

The fame that DeFi projects have amassed is quite the popularity, especially in the year 2020 after the crypto industry’s growth. There are over 1000 DeFi tokens circulating the crypto markets, with the total market cap set at $34.86 billion.

Furthermore, according to DeFi Pulse, the total value locked in DeFi protocols is $25.47 billion, with a market dominance of 18.06%. 

These tokens cover various sectors within the markets, including lending, exchanges, derivatives markets, payments, assets, to mention but a few. The doors opening up from such a surplus of options give investors different pathways to put their capital to good use. Yield farming being a lucrative part of DeFi has boosted the sector’s potential to unfathomable heights. 

However, some entities utilize ways to swindle people’s money, lowering investors’ confidence in such projects. The lack of solid guidelines in most regions globally only adds salt to the injury, as this is the loophole scammers need. 

DeFi Scams

Many would assume that the pros within the decentralized finance sector are safe from any scams launched against investors. However, both pros and novices are prone to fall for these posers. 

Furthermore, considering the constant rise in DeFi projects, there is an equal amount of scams on the rise and circulating the markets. In that case, here are some of the common scams within the DeFi space that most investors fall victim of:

Exit Scams

It is a known fact that most projects conduct initial coin offerings to fund their upcoming projects. Investors put their money into it with the promise of a successful project that will earn you favorable returns. 

For exit scams, promoters launch a DeFi project luring investors to contribute through purchasing tokens. However, they leave with the funds during or after the public offering leaving a frustrated bunch. Once in a while, they may run the project for a short period to increase the credibility farce before exiting the project.

Rug Pulls

Rug pulls are famous in decentralized autonomous exchanges that allow any project to launch and sell its tokens. These scams involve a new project giving away tokens at a throw-away price while hyping its potential in the market. Early investors buy large amounts of the token to lure more people in.

As anyone would jump on an idea to earn a lot from a promising project, more investors purchase the DeFi tokens increasing its liquidity. Once the prices increase, the earlier investors withdraw their profits, leaving the project dead. In turn, most of the people who contributed later fall victim.

These are the two most common scams that most investors are susceptible to face at one point in their DeFi and yield farming journey. However, others are also present, such as staging fake presales, phishing, and impersonating legitimate DeFi protocols. Some of the projects that made investors regret their decisions include SushiSwap, Ether Shrimp Farm, and Yfdexf.Finance, etc. 

Uniswap Scams

As of now, Uniswap scams are not a new happening within the crypto space. Uniswap ETH-based decentralized exchange that offers every project a chance to air its views to the world. Notwithstanding, it’s one of the most misused platforms within the DeFi world, with more entities taking advantage of its name and services. 

In 2020, Google flagged several platforms posing as Uniswap to take advantage of unaware users. Among them were Kyiv Card, Appuniswap.live, and uniswap.com. Even though the site stands as one of the most trusted DeFi sites globally, fraudsters have made their way into swindling people through Uniswap’s name.

Now, everyone must stay awake about the incidents in the DeFi and crypto sector at large. Additionally, you should stay alert for any red flags that may be visible before you lose your money into cleverly forged plans of fund theft.

How to Avoid DeFi and Uniswap Scams

Despite being aware of DeFi scams, it is hard to recognize them. Therefore, how can everyone wish to invest in legit DeFi projects to spot the fraudulent ones? Here are a few tips. 

The Development Team

It is common for the team founding a project to be anonymous within the crypto space regarding decentralization, privacy, and anonymity. However, it is a tricky situation if the anonymous team are scammers since it will be tasking to find them. It would be best to assess such a project with the greatest caution to be on the right track.

All the same, not all anonymous development teams are suspect; this aspect is clearly visible in Bitcoin’s founder/s.

Smart Contracts and Code Audits

All projects should have their smart contracts and code audited to ensure no bugs or other discrepancies that may cause problems to the users. A point to note is that auditing is a costly endeavor. 

Credible projects will spend the necessary funds to have audits conducted by well-known companies. Nonetheless, this process is not an option for scammers as their end goal is to get away with individuals’ investment funds.

In the long run, it is in your best interest to take your time and scrutinize thoroughly smart contracts, and code audits to catch this red flag.

Token Distribution, Contract Addresses, and Transactions

Firstly, anyone can mint and distribute tokens, especially on autonomous platforms. What anyone should do concerning the matter is to check the distribution and liquidity locked for a DeFi token. Some teams may liquidate all tokens to boost the price and later withdraw all the funds leaving users with worthless tokens. Always check that the team does not hold the highest value of the tokens in circulation before getting them.

Another aspect is contract addresses. Searching the etherscan address of a particular project gives you access to analytical information on it. Therefore, you can check the transactions on such, including 24-hour trading volumes, last liquidity lock, last liquidity withdrawal, trading pairs, to mention but a few. If there is minimal to none of these analytics, it would be best to veer away from the project. Always ensure that you check out this information on major platforms like CoinMarketCap, dappradar, and CoinGecko.

Project Plans and Social Media Presence

Every project that plans to proceed with its activities usually publishes its whitepaper. A whitepaper will include the problems a platform aims to solve, its entire roadmap, and clearly state how the team contributes to the project’s success. If a project has no plans to release a whitepaper, that is a clear red flag to keep you on alert.

Moreover, projects with a clear plan ahead will have an active social media presence with users airing good reviews. Furthermore, they give involved parties a chance to review their platforms and point out any places that need improvement. Platforms that lack these elements may be scams that would affect users adversely in the future. 

UniCrypt: Helping You Fight against Uniswap Scams

So far, many projects are coming up intending to give back investors hope and trust in the DeFi world. One such project is UniCrypt, a fully decentralized and autonomous platform to help in portfolio management while bringing users opportunities and transparent investment management.

Unicrypt recently announced its plans to release its launchpad (currently in audit final stage, release by the end of January), giving projects a platform to conduct presales. UniCrypt targets to keep investors’ funds safe and is willing to let any project launch, without any acceptance or other potential bottlenecks. In that case, it has several properties in place to shoot DeFi scam projects.

The first is the UniCrypt launchpad that allows whitelisted parties to point out any suspicious projects that launch presales on the platform. Despite its autonomous nature, any malicious activity will be flagged, including minting, blacklisted projects, and proxies. These details are available on every presale conducted on the platform. 

Secondly, UniCrypt employs a liquidity lock option on Uniswap to prevent any exit scams or rug pulls after presales. Hence, developers have to lock their liquidity for a pre-set time to keep inventors’ funds safe. Furthermore, everyone gets their money back if the presale soft cap is not attained.

By combining its liquidity lockers and its launchpad, UniCrypt allows any project to run a crowdsale with a market initialization requirement. Once any crowdsale is complete, the market initialization is automated, adding the pair on Uniswap and locking the liquidity. In other words, UniCrypt is the Uniswap of presales: decentralized, automated, and scalable.

Parting Shot

To say that DeFi scams are at their end due to increased awareness and protective tools would be a lie. Notwithstanding, everyone has an obligation to look into these projects to differentiate the bad from the good. After all, the DeFi industry is a good place to make profits and engage in mind-blowing innovations.

As such, all investors should take the initiative to study in-depth into anything they wish to put their money. Take note of projects that aim to take your yield farming journey to the next level while protecting your interests. Furthermore, never ignore what social media presents concerning a project. After all, it is the greatest distributor of knowledge and information from various entities worldwide. Finally, put to mind the above-mentioned pointers and more in everything you do for the best DeFi experience.