How To Spot Scams In DeFi

As DeFi projects create captivating financial freedom for people, cybercriminals are looking for ways to exploit them. Decentralized Finance is a challenging space – typically, there are no specific ways of recovering assets or hold scammers accountable. Nevertheless, if you know what to note, the probability of fraudsters exploiting you will be limited.

Scams are all over the crypto industry, and the decentralized finance sector is not left out. As you contemplate investing in several DeFi protocols, be conscious of the chances of losing your crypto assets.

Social media update is one way of luring people into scam projects. Here, there are fake accounts of DeFi projects as there are fake accounts for celebrities. 

Cybercriminals announce false ICO to loot a significant amount of funds. Offers from Telegram, Facebook, Twitter, and other media should be reviewed and examined before investing in the project.

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Token economics is a critical aspect to deliberate on when exploring a Decentralized Finance project. Another way scammers make their gains in this aspect of cryptocurrency is by inflating the crypto asset price while holding a significant number of the token and dumping it in the open market.

An exit scam in the crypto world refers to teams of a crypto project vanishing with holders’ funds during or after an ICO. So, make sure you know the team or promoter of the asset you want to invest in, and anonymous project coordinators are sometimes scammers.

Some of the ways of spotting an exit scam include excessive forecast returns, red flags on team credibility, documentation standards, an imaginary or fictitious working model, and heavily promoted offerings.

Whether you want to participate in yield farming, DeFi, or IDOs, be careful in using Dapps as there are several DeFi scams. Possibly, this content could reduce the risk of getting scammed.

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