In our latest in-depth video, Cointelegraph shares six key tips on how to increase your security when investing in DeFi by identifying rug pulls – one of the most prevalent types of crypto scams.
Booming growth coupled with a lack of oversight from traditional authorities has attracted an influx of scammers into the DeFi ecosystem. According to a recent report by Ciphertrace, fraudulent activity in cryptocurrencies is declining overall, while rug-pull scams in DeFi increased in 2021.
In the typical rug pull, bad actors create a worthless token and list it on a decentralized exchange, where it begins trading in a liquidity pool. The scammer convinces investors to provide liquidity by staking a valuable token like Eth, which drives up the price of the new token. At a certain point, the scammers “pull the carpet”: They take all of the Ethereum out of the pool and leave investors with the worthless token.
With the help of two DeFi experts, we’ve come up with 6 practical tips to spot a carpet tear and minimize the risk of being scammed when investing in DeFi.
Check out the six tips in our video and don’t forget to subscribe to our YouTube channel!