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23 October 2020

Escalating DeFi scams tarnishing the crypto yield farming market niche

Escalating DeFi scams tarnishing the crypto yield farming market niche

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With the help of “moon boys,” or paid shills with considerable Twitter followership, project creators get the word of mouth rolling about their supposed new DeFi “gem.” All these scams share the same premise: low market capitalization brought on by a limited supply of tokens guaranteeing huge returns for early adopters or around 1,000% gains.

For Douglas Horn, chief architect of the Telos blockchain network, the success of these scams thrives on unbridled desire for quick gains in the crypto market, as he told Cointelegraph:.

According to Michael Gu, founder of popular crypto YouTube channel Boxmining, DeFi investors need to adopt the philosophy of “don’t trust, verify.” Writing to Cointelegraph, Gu advised yield chasers to become adept at researching DeFi projects, adding that anyone can easily check “how much a developer has built in terms of code, to ensure they’re not lying or embellishing,” adding:.

Commenting on the negative impact of these scams, Horn told Cointelegraph that blockchain should represent transparency and trust, but “instead, it’s most prominently associated with these scams and unaudited code the same way that the failure of many ICOs to deliver on their promises helped sink crypto in early 2018.” According to Horn, the current situation in the DeFi space is escalating even further than that seen during the ICO craze:

There is an emerging trend in the DeFi space that has seen the market transition from yield farming to “Ponzinomics,” with rug-pulls and fraudulent presales becoming an everyday occurrence over the past few weeks

However, not every stakeholder shares the opinion that these DeFi scams are the death knell of the emerging crypto market

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