Most tokens on Uniswap and BNB Chain are rug pulls

Reports say that Uniswap and BNB Chain are two names that are suffering a lot because of their involvement in a series of projects labeled "rug pull". 

Rug pull is the action of the team behind the project to sell off a large number of tokens right after the token has just been listed on the exchange. In addition, this is also a trick to take advantage of pushing the token price to the desired level, then immediately sell and run away with the newly obtained bargain.

In Vietnamese, "rug pull" can be roughly understood as "crossing the bridge to draw the board". Usually, rug pulls happen within the DeFi ecosystem, especially on decentralized exchanges.

The situation of “rug pull” at Uniswap

Uniswap is considered the most popular DeFi trading platform on Ethereum, so it is not surprising that it is the place chosen by many projects to create a market for their tokens. According to a report, up to 97.7% of tokens listed on Uniswap are listed as “rug pull” tokens.

The report says Uniswap has a total of 26,957 tokens labeled as scam/rug pull, including issues related to source code, liquidity, price, burn/mint and swap events. Meanwhile, only 631 tokens hit the target of no harm. The dataset is observed from May 2020 to September 2021, identified by Unicrypt - a protocol on Uniswap that provides a specialized solution for the rug pull section.

Research also shows that a common point of rug pull projects is that 90% of them will use a "locking contract" mechanism.  

However, some comments from the crypto community show that the statistical method of the above report is not reasonable, because it only filters all tokens on Uniswap according to the criteria of low liquidity and then deduces that there are signs of fraud. . They think that calculation of the report is the same as if you can count all the emails ever sent in the history, most of which will also be spam/junk/advertising emails, but cannot conclude that the email is an error. Bad invention.

The Case of BNB Chain

Not much better than Uniswap, BNB Chain is also getting "notorious" when the percentage of rug pull/scam projects is also concentrated here. Cryptocurrency risk monitoring platform Solidus Labs says that nearly 12% of all BEP-20 tokens are involved in scams, with an estimated hundreds of millions of dollars in scams flowing into the centralized exchange.

However, back in 2021, a rep said Binance was not responsible for “rug pull incidents” or fraud that occurred on-chain. All decisions are left to the investor and they have always reminded their users of this.

Cryptocurrency risk monitoring platform Solidus Labs says it has flagged nearly 200,000 rug pull/scams since August 2020. Solidus Labs says it detects 15 bad projects being deployed every hour. In the past two weeks alone, more than 188,525 smart contract scams have been discovered on the 12 largest blockchains. 

FoxCryptoNews summary

Nov 01, 2022