Yona Gushiken
Shibarium, the layer-2 scalability solution of the Shiba Ecosystem, has redefined the essence of DYOR. Going beyond the mere acronym of “do your own research,” Shibarium’s initiative emerges as a formidable shield, safeguarding investors from the perilous realms of scams and rug-pull projects.
In a recent social media post, ShibariumTech Discord, Telegram Moderator and X Spaces Speaker known by the handle @SpecialShib, shared critical insights from DaVinci, a prominent member of the Shibarium Team, serving as a Discord admin and developer, stressing the importance of diligent personal research before investing in cryptocurrency tokens.
According to DaVinci, potential investors need to scrutinize several key areas: firstly, the background and transparency of the developers, particularly watching out for those who frequently launch and abandon tokens; secondly, the integrity of the token’s code to identify any vulnerabilities or signs of malicious intent; and thirdly, the authenticity of endorsements from influencers, which may sometimes be biased due to conflicts of interest.
“Check the Developers: Investigate the reputation of the developers on-chain. A red flag is if they launch a new token every month and abandon the previous ones. Are they transparent and actively communicating,” Davinci said, before adding, “Review the Code: Examine the token’s code for any vulnerabilities or suspicious activities.”
The post also cautioned against misplaced trust in moderators on communication platforms like Telegram, where individuals may seem trustworthy but harbor questionable intentions. This challenge is part of the larger issues associated with decentralization, where community vigilance is essential in safeguarding against scams.
DaVinci further reinforced the Shibarium community’s core values, including promoting token burning to build a global ecosystem, protecting the legitimacy of projects to guard against scams, supporting non-profit organizations through Shibarium projects and allocating a portion of profits to the Shib Doggy DAO Foundation.
“We encourage Shibarium projects to not only burn and donate but also allocate a portion of profits to the Shib Doggy DAO Foundation,” the ShibariumTech admin further noted.
In its January 2024 Hack3D Web3 security report, the blockchain security experts at CertiK shed light on the alarming prevalence of rug pulls throughout 2023. Despite the comparatively smaller sums pilfered by crypto criminals through rug pulls when compared to the most detrimental exploit of the year – private key compromises – CertiK’s findings underscored exit scams as the prevailing security menace.
A rug pull epitomizes the dark side of crypto investment, constituting a form of exit scam wherein a team solicits funds from investors and the public through token sales, only to swiftly abandon the project or vanish altogether. In this deceitful maneuver, the perpetrators abscond with the raised capital, leaving behind disillusioned investors holding worthless tokens.
Rug pulls often unfold as meticulously orchestrated schemes, with malicious actors exploiting social media influencers and hype-generating campaigns to ensnare as many victims as possible. Some scams go to the extent of co-opting trusted key opinion leaders within the social sphere to cultivate an aura of credibility. Furthermore, certain rug pulls entice victims with promises of exorbitant yields or the allure of exclusive digital assets, a tactic notably observed in NFT-related scams.
The report outlined a staggering tally of 306 documented cases of rug pulls over the past year, hinting at a potentially even higher actual figure. According to CertiK’s comprehensive data, exit scams emerged as a pervasive threat, resulting in collective losses exceeding a jaw-dropping $152 million. This figure significantly eclipsed damages incurred from phishing attacks by over $50 million, painting a stark picture of the risks inherent within the crypto landscape as elucidated by CertiK’s analysis.
In its Q1 2024 report, Certik highlighted that exit scams had siphoned a staggering $68.3 million from investors, with particular emphasis on the BitForex scam, which alone accounted for approximately $56.5 million of the total losses.
