3 scams in one day, rip-off per AI – how dangerous is DeFi on Ethereum?
The last few days have been like a renaissance in Altcoin trading: previously unknown projects on Uniswap, the leading decentralised Ethereum exchange, have increased by thousands of per cent. Even some bigger names have gained hundreds of percent and somehow benefited from the fact that Bitcoin and Ethereum have started to weaken.
Some of these rallies are based on real innovations: SnowSwap started a partnership with BadgerDAO and then gained 500 per cent, while Dynamic Set Dollar, a competitor of Empty Set Dollar, entered by Profit Secret its bootstrapping phase and as a result has also grown enormously (by 1,000 per cent).
But it has reached a point where there are some traders who buy absolutely anything they come across and look even remotely interesting. This brings fraudsters onto the scene who are trying to make quick money.
So fast that last Friday three so-called „rug pulls“ took place within one day. A „rug pull“ is a term that became popular in the DeFi sector last summer to describe hacks or scams.
The two „rebase“ rug pulls
In recent days, „rebase Coins“ have been one of the biggest trends for DeFi speculators.
Rebasing is a crypto term popularised by Ampleforth. The basic idea is that the supply of a crypto currency can contract or expand based on demand, or certain price thresholds that traders must meet.
For some reason, in recent days, investors have entered into every rebasing coin in a FOMO fashion. Including questionable presales from new developers.
One coin, DeFiB, promised to be an Ethereum-based rebasing coin that would automatically increase to the value of all DeFi tokens in circulation.
Unfortunately it did not. The project’s developers had suddenly disappeared and deleted their telegram and Twitter, while users noticed that around 600 ETH (~$300,000) worth of liquidity had been drained from the DeFiB pool.
Strangely enough, some of the lost funds were apparently distributed back to the people affected.
A little later then iBase, yet another rebasing coin. Many were sure that it would work because it was allegedly founded by a developer of a long-standing „yF“ project, yFFS Finance.
Some 300 ETH (~$130,000) were collected in a private advance sale that was reportedly completed in less than a minute.
The developer aimed to invest part of the ETH from the pre-sale in uniswap to allow speculators to bet on the coin. But when it came time to use these funds, the telegram channel for iBase was deleted.
Decentralised fund manager platform steals almost $1,000,000
The biggest „rug pull“ yesterday was the theft of about 1,450 Ethereum, or about $800,000.
DeTrade Fund, which allegedly would allow any Ethereum user to participate in arbitrage (a trading method often reserved for advanced funds), collected 1,450 ETH in a pre-sale.
It attracted attention in some segments of the Ethereum community because the company was registered in the UK and audited by a respected Ethereum auditor.
But yesterday, the team deleted its social media profiles and made off with the money. There is an ongoing debate on Twitter about whether the team used a freelancer or even a deepfake of artificial intelligence to create a character to promote their product.
Proponents of the Deepfake theory refer to the video below, which shows the project’s CEO apparently discussing the DeTrade Fund