As Bitcoin has stalled over recent weeks, decentralized finance has ripped higher. DeFi, as it’s better known, is currently one of the only segments of the cryptocurrency market seeing growth.
Take the example of Compound‘s COMP altcoin, which is trading at $200 as of this article’s writing. This is six times higher than the crypto’s price during its public launch in the middle of June. Also, COMP now has a market capitalization in excess of $500 million despite it literally being weeks old.
With such a large amount of capital being thrown around in this crypto sector, it’s no surprise that there is some unscrupulous folk attempting to capitalize on the hype.
DeFi scams are becoming prevalent, Ethereum community warns
Because Ethereum is decentralized, anyone anywhere can use its native cryptocurrency ETH and tokens and applications based on the blockchain. This means that even scammers can use and have used Ethereum to their advantage.
With DeFi becoming the crypto industry’s flavor of the week, the Ethereum community and broader crypto industry have begun to warn of scams.
Commenting on the caveats in the recent growth in the DeFi sector, crypto trader Josh Rager said:
“Will certainly welcome if DeFi coins want to pump like ICOs… One must understand […] that there will be many scams and eventually prices will undergo massive retraces.”
DeFi portal DefiPrime was a bit more specific, identifying the most prevalent DeFi scam at the moment: fake token listings on Uniswap, an Ethereum-based decentralized liquidity network