As the crypto market grows in adoption, the number of malicious projects seeking to scam users also increases significantly. It is a worrying phenomenon that has not only caused enormous financial losses but has also generated a high level of distrust in the ecosystem. Let's see how stonfi recommends you prevent, with some valuable advice, the different types of scams, especially Jettons, that are being created in the TON network, which due to its great popularity, is also in the eye of scammers.
Let's talk especially about Rug pulls, a very common type of scam specifically in DEX, in which the developers of a cryptocurrency project attract investors and enthusiasts with promises of innovation, high returns, competitiveness among other attributes, and then suddenly disappear with user funds once their token reaches high levels in price.
According to Hacken, cryptocurrency "rug pulls" constituted the largest number of cryptocurrency exploits, accounting for more than 65% of all hacks in the third quarter of 2023.
In the crypto space this is not new, it has been happening for a long time, and perhaps the most famous scam was ONEcoin, a token that scammed more than 4 billion dollars and that promised to be the improved version of bitcoin. The currency was not even on the mainnet and was not based on the Blockchain but on a simple server, but FOMO at that time meant that the ambition to have high returns ended in a multimillion-dollar loss for thousands of users.
At TON we had not had relevant scam cases, but lately thanks to the great receptivity of the audience there is a fever of projects that are potentially scams and we must learn to identify them. One of them was Tonic, a memecoin based on the popular character from an animated movie that had nothing to do with TON but gained a lot of popularity in its early days thanks to the developers paying some influencers and even some ambassadors of TON. Ton to advertise them. When the token reached its ATH, the developers did rug pull and closed their social media accounts, leaving everyone stunned and unable to withdraw their funds since they had run out of liquidity.
Tonic was listed on STONfi, as any Jetton can be, since it is a DEX in which anyone can request to list their Jettons, but which recommends users make a thorough DYOR on the management of users' investments.
What can we do to avoid being victims of this type of scam?
As STONfi recommends, we should :
- Do our own research or DYOR. It doesn't hurt to look for information about the team, who is behind the project, its history. Their profiles on social networks
- Review the source code; Seeing if the code is open or if the project has been audited is a good sign of transparency and security
- Read the White paper: there you will find practically the entire vision of a project, its roadmap, technical data, tokenimics, among other important data to know the type of technology or strategies that will be applied.
- Review liquidity and trading volume: generally when the volume is low, they are more susceptible to a rug pull since they do not show genuine interest from investors and for this reason the devs decide to leave with the largest sum of money possible
- Avoid FOMO: the ambition to generate income overnight in this type of tokens can lead us to significant losses. It is recommended not to invest money that you will need later
Here we can see an announcement on the official STONfi telegram page where they talk about the issue of rug pulls:
🗿 DYOR Twice Before You TRADE Once
⚡️ Stonfiers! As you already know, any user can add their token to the STON.fi DEX using the contract address. The availability to add your own assets to our DEX list ensures trading pair diversity and provides more opportunities for trading. This is undoubtedly a big plus ✨
On the other hand, interacting with any tokens can carry certain risks.
⚠️ We remind you that community tokens have not been added to the default list, and they do not have liquidity guarantees. Trading any tokens should be done with an understanding of all risks. There are known cases where the development team instantly sold their native assets or depleted available liquidity at the peak of the token’s popularity. This fraudulent practice is called a Rug Pull. More information about Rug Pulls can be found in our blog
https://blog.ston.fi/rug-pull-tactics-a-common-practice-of-fraud-in-crypto-space/
⚠️ Another example of fraudulent tactics is a fake token. Such asset can pretend to be a well-known token or the official token of a particular project. A fake token may have the name and logo of a popular project, but a careful trader will not find any information about it on official resources. Recently, similar schemes have been noticed around Notcoin.
How to protect yourself from fraudulent schemes?
✨ DYOR - Do Your Own Research. Always. Explore all available materials about the project and the development team. Pay attention to liquidity volumes, price impact indicators, and all other possible metrics. Look at the asset price charts, clarify what exactly led to its popularity, and do not succumb to artificial hype.
DYOR, and operations with any tokens will bring more opportunities and profit, and your funds will be safe.
I see with concern how unfounded projects appear daily, without a clear White paper, without audit, based on memecoins that have been successful in the past, to attract the attention of novice users. STONfi recommends doing a DYOR before investing in these types of projects that lack credibility. So far, STONfi has created farming with quite juicy APYs only from promising Jettons that have managed to gain the trust of the community. These projects have so far maintained good performance, with clear and precise white papers and a good long-term vision, which has led the stonfi team to promote their farming pools on the platform. My main recommendation as a stonfi user is not to fall into FOMO and not get carried away by other users who promote projects of dubious origin, investigate, be cautious and distrustful at all times, and of course do not echo any advice. Only you are the ones who know how much money you can invest
