With the total volumeThe total amount of currency being traded in the open market... More and liquidityThe liquidity of a cryptocurrency is defined by how easily i... More reaching new heights since DEFI-summer, we thought it would be interesting to take a look at the data behind Uniswap, the biggest decentralized exchangeThe platform through which cryptocurrencies are exchanged wi... More to date. While its volumeThe total amount of currency being traded in the open market... More doesn’t come close to the volumeThe total amount of currency being traded in the open market... More traded on the biggest centralizedA system of power where central authority has control over t... More exchanges, the variety of tokens is enormous. If this seems like a good thing, it isn’t. There are nearly 30 thousand pairs listed on Uniswap and because they can be listed at nearly no cost, it’s a playground for people, or groups of people, with bad intentions. The graph below shows the amount of pairs that have been listed on each day since april 2020. During the month of October 2020, approximately 7500 pairs were listed, with some days topping off at over 300 per day, that’s one every 5 minutes.
Anyone who has traded on Uniswap is familiar with the ”TokenA unit of value used for various purposes within a crypto ec... More Safety Alert” message that pops up whenever you’re visiting a pair. Since Uniswap is a decentralized exchangeThe platform through which cryptocurrencies are exchanged wi... More, and thus there is no team actively scanning these tokens and projects, it’s probably the best they can do. Looking at the numbers, we can conclude that not even 10% of the pairs on Uniswap can be freely traded.
To determine if one could ’freely trade’ within a pair, we looked at the liquidityThe liquidity of a cryptocurrency is defined by how easily i... More of the pool at the beginning of February 2021. From the nearly 30 thousand pairs on Uniswap, exactly 2223 pools had more than $100 in them. Over 26 thousand pairs have exactly $0 liquidityThe liquidity of a cryptocurrency is defined by how easily i... More. As a side note, many legitimate projects on Uniswap have one main ETH pair, and multiple other (failed) pairs that were started by the community. These pairs have no liquidityThe liquidity of a cryptocurrency is defined by how easily i... More, but are not suspicious pools.
From the 25 thousand unique tokens, there are approximately 14 500 unique tickers. Not looking at WETH, USDC, USDT and DAI, the top 20 tokens based on frequency are given below.
Take a look at pneumonoultramicroscopicsilicovolcanoconiosis1 and wzdfchsqhwcbgwbuzsgwrsrsldc. You are not having a stroke, these are real ERC20 tokens listed on Uniswap. As you could’ve guessed, none of these tokens have any liquidityThe liquidity of a cryptocurrency is defined by how easily i... More. Of course you shouldn’t judge a book by its cover, but if the cover is pneumonoultramicroscopicsilicovolcanoconiosis, you might want to rethink.
The graph below shows the amount of pools with liquidityThe liquidity of a cryptocurrency is defined by how easily i... More within the given range. As mentioned before, a big part of the <1k pools belong to community members starting an exotic pair.
When a hyped project is announcing a listing on Uniswap, a lot of pairs pop up out of nowhere with the same ticker. An example of this was the UMB listing on February 9th 2021. The same day the real tokenA unit of value used for various purposes within a crypto ec... More listed on Uniswap, a total of 8 tokens with the same ticker were detected. Since being one of the first buyers on a Uniswap listing has its perks (the bonding curve often makes for parabolic launches), many people buy based on ticker and don’t verify the contract address.
- Pair address : 0x02805e505116863cfbbb0e3f22ae1ffad9cf27b6
2. Pair address : 0xbb5db92ab739ae3537a9a544d49853e8dc60be13
- Date : 2021-02-09 12:08:05
Contract : 0x58160b1338e482828790f8b41a0483c649a8b84b Ticker : UMB/WETH
Pool size : 6000000 UMB/70 ETH
Current status : Rugpulled
Estimated profit : 3.6 ETH
- Date : 2021-02-09 12:34:51
Contract : 0x775fd16efc9aac08f67369e89811095ac17a5999 Ticker : UMB/WETH
Pool size : 7036492 UMB/200 ETH
Current status : Rugpulled
Estimated profit : 11.7 ETH
- Date : 2021-02-09 13:08:055
Contract : 0xf6444de39529d6057e107e6a90f0e803558d0dc1 Ticker : UMB/WETH
Pool size : 2600000 UMB/75 ETH
Current status : Rugpulled
Estimated profit : 13 ETH
- Date : 2021-02-09 13:57:32
Contract : 0x838f02f8a98cc4f17248b72182acdb33c1895a90 Ticker : UMB/WETH
Pool size : 1000000 UMB/30 ETH (+40 ETH) Current status : Rugpulled
Estimated profit : 27.7 ETH
- Date : 2021-02-09 14:30:46
Contract : 0xefe635624608808cd4a806eca3cc971c0ed9987c Ticker : UMB/WETH
Pool size : 1000000 UMB/40 ETH
Current status : Rugpulled
Estimated profit : 1.3 ETH
- Date : 2021-02-09 14:32:08
Contract : 0x8b65ce1de931c977fc05ef377712b0697dfe6b3a Ticker : UMB/WETH
Pool size : 7000000 UMB/200 ETH
Current status : Rugpulled
Estimated profit : 22.8 ETH
- Date : 2021-02-09 14:37:48
Contract : 0x5a4bd25c213a56bc0f281121ae752e51c9347161 Ticker : UMB/WETH
Pool size : 250000 UMB/1.3 ETH
Current status : Rugpulled
Estimated profit : 0 ETH
- Date : 2021-02-09 14:50:26
Contract : 0xfe4a6a2565d52b442edba16c1fbbdc9f26b6d275 Ticker : WETH/UMB
Pool size : 8595843 UMB/249 ETH
Current status : Rugpulled
Estimated profit : 26.5 ETH
- Date : 2021-02-09 16:11:38
Contract : 0xc08eeae938efa1ff974d8304c19deb803b764bf5 Ticker : UMB/WETH
Pool size : 3448276 UMB/1 ETH
Current status : Active
Estimated profit : 0 ETH
The estimated profit is based on the amount of ETH that was pulled out minus the ETH that was put in the pool. The only reason these wallets can exit with more ETH than they originally put in, is because the tokens they put in are not legitimate tokens. Once you buy them, you are not able to sell them. There are multiple ways to do this, and without thoroughly inspecting the tokenA unit of value used for various purposes within a crypto ec... More contract, it’s best to not immediately jump in. You can see creating fake tokens is a pretty lucrative business, with one walletA wallet is defined by a unique code that represents its “... More making a profit of almost 30 ETH in under 3 hours.
The first method involves the approve function on Uniswap. When swapping a tokenA unit of value used for various purposes within a crypto ec... More on your walletA wallet is defined by a unique code that represents its “... More for the first time on Uniswap, you have to approve the tokenA unit of value used for various purposes within a crypto ec... More. By doing this, you allow Uniswap to spend your tokens. In theory you can limit this amount to exactly how much you want to swap. As this transactionThe value of cryptocurrency moved from one entity to another... More is put on the blockchainThe blockchain is a digital ledger of all the transactions e... More and thus costs gasA measurement given to an operation in the Ethereum network ... More, it’s better to allow Uniswap to spend an infinite amount (2256-1) of your tokens, which is exactly what the built-in function on the Unisap GUI does for you. ERC20 tokens that are used in scams often don’t have this approve function and immediately revert or reset the allowance to zero. This means that Uniswap cannot spend your tokens and you’ll be stuck with them forever.
Another method withdraws the tokens from your walletA wallet is defined by a unique code that represents its “... More before the swap on Uniswap happens. You can literally see this in the contract, and since you buy the tokens, there’s not much you can do. At first, everything seems normal, the tokenA unit of value used for various purposes within a crypto ec... More gets approved, the swap is put on the blockchainThe blockchain is a digital ledger of all the transactions e... More, great. When you look at the transactionThe value of cryptocurrency moved from one entity to another... More on EtherscanA web tool that lets you explore transactions, wallets, and ... More however, you’ll see that before the tokens are sent to Uniswap, 99.99% of your tokens are withdrawn.
The final and most straightforward method is the whitelisting of addressesA unique address that identifies where a cryptocurrency sits... More. Some ERC20 tokens will have an owner function. This is then used to revert any action on the tokenA unit of value used for various purposes within a crypto ec... More that is not coming from the owner, i.e. the scammer, of the tokenA unit of value used for various purposes within a crypto ec... More. Not every tokenA unit of value used for various purposes within a crypto ec... More with that function is a scam, and not every scam tokenA unit of value used for various purposes within a crypto ec... More has that function. There’s not much you can do about this. Some tokens also have other addressesA unique address that identifies where a cryptocurrency sits... More whitelisted, to create the illusion of selling in the pool. A pool with only buy transactions seems suspicious, so the scammer can have for example 5 addressesA unique address that identifies where a cryptocurrency sits... More from which they can sell small portions of tokens, to make it \look like they are not taking your money.
In conclusion, it is in your best interest to not buy any tokenA unit of value used for various purposes within a crypto ec... More on Uniswap if you’re not sure about the tokenA unit of value used for various purposes within a crypto ec... More address. Many tokenA unit of value used for various purposes within a crypto ec... More projects that list on Uniswap will give you the tokenA unit of value used for various purposes within a crypto ec... More contract beforehand, to prevent their community from buying into those scams.