Uniswap: Fake DeFi tokens surge as liquidity farming becomes popular

Uniswap scams are getting exceedingly frequent as DeFi as a sector keeps getting the center stage.

By · Jul 9, 2020 . 5min read

Since Uniswap is a decentralized entity, it has seen an increasing number of users creating tokens posing as governance token for popular platforms in DeFi that haven’t launched a token yet. This has caused a lot of naive investors to lose their funds to such scammers.

In recent times, with the hype around “liquidity mining” or “yield farming”, DeFi seems to have received the center stage. Particularly after the launch of Comp token by the Compound platform.

Uniswap is a popular open-source decentralized exchange (DEX) in DeFi that allows users to import any token by pasting its address into Uniswap’s swap menu. A special emphasis has to be made on the “decentralized” and the “open-source” aspect of the protocol.

With this emphasis and the volume of Uniswap which far exceeds that of Curve or Kyber platform, it should be obvious why scammers chose Uniswap. In fact, Uniswap is the top DEX in terms of volume and boasts a 24-hour volume of $23 million.

Hence, the go-to place to attract users, be it scam or a legit project would be a decentralized and ope-source platform like Uniswap. 1inchexchange, another DEX tweeted,

If you are wondering – 1inch token is not out yet. If you see any in the wild – that’s likely a scam

Curve tweeted the same. DeFi isn’t a stranger to attacks, exploits, or hacks. There are plenty of attacks on protocols and platforms, which are given considering the nascent phase of the crypto sector.

Even Balancer Labs, which followed Compund’s footsteps, launched governance token “BAL”, that could be used by users to vote on the upcoming/on-going governance topics. Unlike Compound, it suffered an exploit that allowed user(s) to siphon a whopping $500,000 worth of tokens from the liquidity pool.

An advice to users who are exploring into the alluring world of Decentralized Finance – beware. Although DeFi has platforms and incentives that offer better money-making opportunities or APY, it is advised to not let greed trump logic or common sense.

The only way to prevent oneself from losing funds or being scammed is to do thorough research before investing in any platform.

Meanwhile, stay wary of those scam tokens on Uniswap.

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