Rugs and Squids – The Crazy face of crypto.

crypto-market-crash.jpg

You saw that drop right? Tragic…that’s the best word. From thousands to decimals, I took time to wrap my head around the pains of the investors who were devoted to the project. But then, this is actually a norm and hundreds of similar stories fill the crypto space. Millions of dollars wiped, thousands of investors left to nurse mild to grave losses. Well, the gains were cool while they lasted.

Hwang Donk-hyung’s blockbuster series not only broke streaming records, it swept the internet by its feet. The crypto space is hardly left out as jumping on mainstream trends is a thrilling adventure for the crypto community. Hopping on the already ravaging GameFi trend, Squid game related projects have since filled the space, each making reference to the popular Korean survival game and presenting Play-to-earn and NFT opportunities and rewards respectively. These projects were quick to gain prominence thanks to Hype marketing and of course, gullible investors.

zulz8iqimyw71.jpg

After posting mind-blowing gains in a meteoritic rise, Squid token crashed to zero. Well, that happened too fast…biggest red candle I’ve seen in my four years of watching cryptocurrency charts. Elsewhere, similar stories are being told. Just like the concept itself, cryptocurrency scams are evolving. For Every new technology is accompanying tweak that allows exploiters foil the system.

Hey, before going further, have you Followed us on Twitter?

EjWnpT7WkAY7tJY.jpg
Novel ‘Decentralized Finance’ introduced a number of brilliant protocols and algorithms; liquidity pools and ‘Automated Market makers’ inclusive. While these protocols worked well, they in fact ushered in another era of terror in the crypto space. Automated Market Makers potentiate buy and sell actions; due to the absence of a buy and sell wall, every purchase or sale has a relative effect on price. Liquidity pools on the other hand create a stash of tokens which can be easily controlled by a single entity.

New projects leverage decentralized swap platforms to easily create a market for investors. This simplicity has given birth to tons of new projects as the hassles of getting listed on an exchange has been simplified by DeFi liquidity pools and automated market makers. Reputable projects utilize this technology to improve their availability and as well expand buy and sell opportunities for holders. But shady projects have also found this very useful too.

Fact is; Centralized exchanges can not totally stop scam projects from trading, but the scrutiny and procedures to get listed on centralized exchanges minimize the chances of shady projects going into the market.

Liquidity pools provide a basket of exchangeable assets to enable unrestricted trading for the period which the liquidity providers wish to leave their assets on the pool. Assets in the liquidity pools are contributed by holders who can remove their supplied liquidity at will.

The highest percentage of the liquidity pool for a project is usually owned by the project teams. New projects add a certain amount of liquidity at launch; this enables investors to buy or sell after launch… but that’s where the terror comes in.

Project creators could withdraw this initial and major liquidity they provided after investors’ tokens have accumulated. This drains the liquidity pool and leaves the project dead. Rug pull; that’s the term.

Squid creators pulled the rug, but that’s just one out of a thousand cases. Seems we are actually nowhere near getting rid of toxicity in this space. Investors find it hard to take precautions, these projects are usually promising and the thought of ‘being early’ in a promising project is irresistible for investors. AMM-powered gains are usually mind blowing there are no buy and sell walls and every trade have a relative effect on the overall price of the token.

Screenshot (278).png

Taming greed is a precaution usually advised, but whether it is actually effective is arguable. Investors invest, that’s principally what non-team members do in crypto. Despite being arguably effective, this is the only way of minimizing the chances of falling prey to the crazy streets of crypto.

Doxing the devs, locking liquidity… these approaches have been tweaked by project teams and are used to lure investors into believing again. It’s a wild west with no definite fix. It represents everything people despise crypto for.

Have our next publication delivered to your mailbox


Cryptocurrency Scripts is transforming into a community of enthusiastic cryptocurrency and blockchain believers! Join the Adventure!

Would you love to read similar articles?


Have our next publication delivered to your mailbox

Follow us on Twitter
Follow us on Medium
Follow us on Publish0x
Follow us on Facebook

Posted Using LeoFinance Beta



0
0
0.000
0 comments