Reporting Claims 97% of Uniswap Tokens Are “Pull the Rug” – Crypto Twitter Has Doubts

A team of researchers said that 97.7% of the tokens launched on decentralized crypto exchange Uniswap turned out to be fake.

UnsurprisinglyCrypto Twitter has some ideas.

The researchers were looking to build on the work done in one Study 2021 That used a machine learning algorithm to analyze transaction data and find Uniswap codes that turned out to be scams. But this algorithm was only able to identify suspicious tokens after the fraud occurred.

In the new study, the researchers claimed to have added transaction data from an additional 20,000 tokens, analyzed the data manually, and developed machine learning methods that can “detect potential carpet moves before they happen” with 99% accuracy.

This means that of the approximately 27,000 codes analyzed, only 631 were found to be “harmless”.

Pulling the carpet occurs when the developer releases a code, making it seem as if there is a roadmap for further development, sells the code on these empty promises, and then vanishes with the money. Before you become brocade hackers 2 billion dollar problemCarpet recall was a large part of the $2 billion total stolen year 2020According to the 2021 CipherTrace Report.

Keep in mind that the term “new” is a relative term in academics. The paper has been published by Multidisciplinary Digital Publishing Institute March 2022. But it may not be clear from the repression suggestions who made the rounds on Twitter Nick Almond, who leads the FactoryDAO protocol, shared it on Monday.

Researcher Bruno Mazara told us Decrypt In an email, he said he had seen conversations about the team’s research on Twitter and provided a link to the published copy.

The joint draft has a date of January 2022. It was also uploaded to ePrint archive encryption in March. The version published by MDPI is a few pages longer and has expanded the dataset to include tokens that were on Uniswap V2 until September 3, 2021, but otherwise are the same.

In response to Almond’s tweet, Mark Zeller, vice chair of the DeFi Commission at L’Adan, the French digital asset industry group, noted that regulators there have taken a long time to reduce the minimum capital required to register an LLC to €1.

He likened it to the speed and cheapness with which people can create new tokens and list them on cryptocurrency exchanges, such as Uniswap. People who opposed changing the French LLC’s registration were concerned that it would make it too easy for “idiots and scammers” to register seemingly legitimate business entities.

“It was true. What was also true was that some of these €1 companies were now unicorns,” Zeller wrote. on Twitter. “I stand for freedom and take personal responsibility for the risks.”

Others, such as investor and Israeli Blockchain Industry Forum board member Maya Zahavi, have targeted the research team’s methodology.

“I’m sorry, but this is a completely wrong approach to this claim,” she said. on TwitterHe complained that the researchers did not take into account the fluidity or size of the tokens when determining which of the roughly 27,000 tokens that saw a rug drag.

“It’s like saying 97% of Twitter accounts are fake, but none of them were active in the last year,” Zahavi concluded.

The researchers used the Infura repository node and the Etherscan API to collect transaction data for all tokens included in Uniswap V2 between April 5, 2020 and September 3, 2021. The paper details the methods used (among which the Herfindahl-Hirschman index that Federal agencies are used to assess markets) and the claim that other fraud detectors such as Token Sniffer and Rug Pull Detector give misleading results.

For example, it is common in decentralized currency finance to include reservoirs of liquidity, Like UniCrypt, as a guarantee that developers will not be able to move funds from a smart contract once it has been deposited by investors. But this is not a guarantee against being scammed, the researchers wrote, saying that “90% of tokens that use lock contracts tend to eventually become a rug puller or malicious token.”

There was some disapproval from DeFi Pulse founder Scott Lewis, who argued that the researchers — or at least Almond in his 12-word summary of their 21-page draft — used the term “rug pulling” excessively.

He said many of the tokens on Uniswap were “low-effort scams/low-income phishing tactics, where the token tried to look like a token,” adding that the same scammers could generate thousands with very little effort.

“Rug is an exit scam and 97.7% of the tokens were not on Uniswap,” wrote on Twitter.

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