Scam or Scam in DeFi?

6 min readDec 27, 2021

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Introduction

Let’s talk about scam. The space of DeFi, attention DECENTRALIZED FINANCES- money not controlled by anyone, attracts a large number of scammers of all kinds and colors. Add to this a bag of technical reasons and a hype around cryptocurrencies, we get easy ways to scam, where on one side are people who do not have enough knowledge, trapped by the wish to get rich, and scammers, perfectly adapted to the situation. You can do anything without any problems.

The high chances of getting rich have always come with high risks, with unfortunate results in the end. For example, in the days of the gold rush, most people died along the way, and the richest were shovel sellers. Now we can observe all of this in the crypto space as well. For technological experiments and people getting rich overnight, someone is paying the price. And these are other people, most of them. About this people not talked, because history is written by the winners.

All we can do, if we decide to support this trend in productive side, is to be informed and careful with our money. DeFis starts a series of articles about schemes and types of scams.

Binance Smart Chain (BSC)

So historically, the Binance Smart Chain opened the way to simple tools for developing decentralized applications and creating cryptocurrencies in two clicks.

They are all organized around smart contracts. Automated code that governs the laws and rules within any tokenomics (the economic structure of tokens)

Now it is one of the popular networks for newbies due to its ease of use and small commissions. This is where scammers like to do their dirty tricks.

Duplicate Contract Scheme (DCS)

When a cryptocurrency is launched, it has a primary smart contract address. This is where you can buy or sell that cryptocurrency. Blockchain is designed in such a way that you can create many copies of the same name, but with different addresses. Just like people do. There are a lot of people with the name Jake and a lot of people with the last name Jonson. But they have different addresses of residence and they are actually different people with different lives and professions. Although they can be born the same day ;-)

Almost all scam schemes use manipulation of people’s attention.

When some token comes out on the market, usually a launch date and an entire holiday event, the scammer creates his address with exactly the same name and tries to share it with as many people as possible, masked as an official website, support service, or official group. The target does not notice the switch, goes to this fake address and makes a purchase.

But it is not a problem! After all, you can just sell what you bought by mistake. No — scammers embed a 99.9 percent commission on the sale in the code, and the sale becomes impossible. Not quite — we can sell such a token and get 0.1% of our money back, which is equal to losing it.

Examples

WIDI

The WIDI token is the currency of a recently released young game. This game is just at the beginning of its journey and many people want to support the project or try their hand at speculation. The contract was created on the Binance network. Going through the official site and checking a few times that it is the official site, we decided to look at the rate observers its graph.

All seems well, the usual graph for a young project. There are buying and selling, in small batches. People are trading.

We close the tab and try to find the contract address again, but in the Poocoin. We find it.

We go to the search results and see the graph going up. It’s a dream come true, you can put in $100 and walk away a millionaire in an hour. But no. This token has no sales, the contract has a different address than the official one. This token has $20,000 of liquidity. That is, people gave that amount of money to a scammer, just in a hurry and in a wish to invest in a young project at the start. You can buy this token in any amount, but you can’t sell it.

Star Atlas

The token of the promising Star Atlas project is also present in various kinds of duplicates. Here the story is even more paradoxical. The Star Atlas project was released in a completely different network (country) — Solana. On Binance Smart Chain created duplicate contracts and people give money to scammers even today. Unfortunately, the scale of this amounts to hundreds of thousands of dollars and hurts to the core. We decline to accept it as the norm!

Here the scammer even tries to imitate sales to confuse slightly curious minds. But the idea is the same. there is no official contract of this project in Binance network.

Conclusions

Now that you know how it works, you can easily protect yourself from losing money. Spend more time and attention when shopping or reading to not become a target of scammers. After all, no possible profit is worth such a destructive experience. Why is it possible?

Insufficient work of project teams in timely provision of reliable information, insufficient work of Binance network representatives, emotional purchases and desire to get rich right now from people. Distortion of information by the media to get traffic. There are many reasons and this topic is much deeper than one simple scheme. We’ll try to uncover it over time. See you later and be safe!