In our newest in-depth video, Cointelegraph shares six key tips about the best way to enhance one’s security when investing in decentralized finance (DeFi) by figuring out rug pulls — some of the widespread varieties of crypto scams.
Booming development coupled with an absence of oversight by conventional authorities has attracted an inflow of fraudsters to the DeFi ecosystem. Based on a current report by CipherTrace, whereas general fraudulent exercise in crypto is decreasing, rug pull scams in DeFi have been on the rise in 2021.
In a typical rug pull, unhealthy actors create a nugatory token and listing it on a decentralized alternate, the place it begins buying and selling in a liquidity pool. The scammer convinces traders to supply liquidity by staking a helpful token, similar to Ether (ETH), which pushes the brand new token’s worth up. At a sure level, the scammers “pull the rug,” taking all of the Ether from the pool and leaving traders holding a nugatory token.
With the assistance of two DeFi specialists, Cointelegraph identified six sensible tricks to spot a rug pull and decrease the danger of getting scammed whereas investing in DeFi.
Check out the six tips in our video, and don’t overlook to subscribe to our YouTube channel!
