A recent study found that almost all crypto projects listed on Uniswap between 2018 and 2021 were malicious and related to scams.
The study titled DO NOT RUG ON ME: ZERO-DIMENSIONAL SCAM DETECTION, was conducted by three researchers; Bruno Mazorra, Victor Adan, and Vanesa Daza from Pompeu Fabra University and Barcelona University.
Can Uniswap Be A Fake Home Project?
Uniswap was created in 2018, and the protocol is a growing decentralized finance (DeFi) application network.
DEX has more than 40,000 tokens compatible with the Ethereum smart contract (ER20) hosted on the platform to provide users with options for trading different crypto assets. Over the years, Uniswap has become one of the most important DeFi protocols in the industry, processing more than $1 trillion in trading volume since its inception.
While Uniswap is the largest DEX in crypto, it is the newest findings by researchers showed that 98% of all projects listed in the protocol between 2018 and 2021 were carpet pulls.
Pull up the rug is a popular technique used by scammers to deceive DeFi investors. They develop new projects, create marketing hype, and abandon the project when they run away with investor funds.
The study found that Uniswap’s simplicity and lack of regulation made it a target for malicious actors to efficiently run initial coin offering (ICO) scams by listing worthless tokens on the platform.
Researchers examined 27,588 tokens, of which 631 were classified as non-malicious and 26,957 were identified as malicious. A total of 24,870 tokens labeled as malicious were quick draws, while the remaining 2,087 were not LPs that were burned.
The results were compiled by generating a history of all tokens registered on the platform from launch to 2021 using the Infura 18 archive node and the Etherscan 19 API for analysis and labeling.
“To obtain the status of the Uniswap exchange and tokens, we use the events produced by the respective smart contracts. Any node connected to the Ethereum JSON-RPC API can observe these events and act accordingly. Events can also be indexed so that the history of events can be will be searched for later,” said the researcher.
Crypto Reacts Community
As expected, the latest investigation received backlash from the crypto community after it was shared on Twitter by crypto advocate Drnick.
Twitter users questioned the efficiency of the investigation, noting that the model used to conduct the research required the inclusion of token liquidity/volume.
Sorry, but this is the wrong methodology for such a claim. They literally took ALL tokens since 5/20 – 27k in total & didn’t bother filtering by liquidity / volume…whatever.
It seems like 97% of Twitter accounts are fake, but none of them have been active for the past year
— Maya Zehavi (@mayazi) 31 October 2022