Scam tokens trick traders with bogus coins of legitimate DeFi projects

scam tokens

Scam tokens are bogus coins of DeFi projects due to Uniswap’s loose “listing” policy. The decentralized exchange (DEX) allows users to essentially import any token by pasting its address into the Uniswap’s swap menu. However, it’s unclear how many traders were scammed into trading with fake coins, as the exchange has no mechanism that prevents fake listings.

Be careful with Uniswap scam tokens

Automated liquidity protocol Uniswap has seen its popularity skyrocket in the past year, as more and more innovative DeFi projects get built on Ethereum. The protocol provides automated liquidity provision on Ethereum, driving what could be described as “unstoppable” liquidity for thousands of applications. Nevertheless, apart from thousands of new users, these features also seem to have attracted numerous scammers.

According to reports from DeFi Prime, there could be as many as a dozen coins on Uniswap appearing to be real coins of legitimate projects and tricking users into swapping their funds with a worthless spam token.

Balancer, a non-custodial portfolio manager and liquidity provider, was among the first to notice the scam—the company warned its users about the Balancer Token (BAL) on Uniswap, saying it was not affiliated with the company. The BAL token is the only contract that is valid for Balancer.

⚠️⚠️⚠️ The Balancer (BAL) token 0x6cb8… on Uniswap is a SCAM. BAL has not been created yet ⚠️⚠️⚠️We’ll announce here when the official token gets deployed.

Curve Finance, an on-chain liquidity provider, also noted a falsified token on Uniswap, as they too still don’t have a token.

If you are wondering – Curve token is not out yet. If you see any in the wild – that’s likely a scam.

Tornado.cash, 1inch.exchange, dYdX, bZx, are just some of the DeFi protocols that have seen “their” coins listed on Uniswap.

Free for all listing process

The rise of scam tokens on Uniswap is a direct outcome of the platform’s very loose listing protocol. All tokens that have a deployed Uniswap exchange are sustained on the platform’s front-end. That means that users can paste the token address into the search box and it will instinctively populate the dropdown with the token.

Scam tokens

For a token to be officially listed in the dropdown, an inclusion request on Github is required.

The issue has drawn the attention of many, with most agreeing that some kind of a threshold for listing needs to be put in place. Although, others argued that scams are a natural result of a decentralized and uncensorable system, adding that it was up to the user to do due diligence before interacting with the protocol.

The listing process on centralized exchanges is much more labor-intensive and usually includes a lengthy vetting process for each coin. The bigger and more regulated the exchange, the more rigorous its listing requirements are.

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