Episode Four: Uniswap DeFi Rugs Chronicles

The decentralized finance (DeFi) hype seem to had cooled down a bit but Andre Cronje’s latest project kp3r showed us that on a good day DeFi can buy you a Lamborghini.

Kp3r was recently relaunched and listed on Uniswap at a starting price of $1.4 which went on to reach an all time high of $350. That means anyone that bought the tokens below $5 and held till above $200 made a massive x40 and above on their investment.

See Also: Episode Three: DeFi Rugs Chronicles

Andre Cronje’s latest project made me realize the DeFi hype isn’t over just yet and if you are lucky enough to invest in the right project you can make massive returns on your investment.

The DeFi space was dominated with kp3r’s pump until some well promoted and shilled DeFi projects like KORE, KPER and AXN pulled the rug (exit scammed). The end of last two weeks and beginning of the previous week have all been dominated by rug pulls.

KORE RUG

KORE, a DeFi project recently got listed on popular cryptocurrency index site coingecko.com on 30th October. This listing brought a lot of exposure and ushered in more investors for KORE, unknowing to them that the project was just another rug waiting to happen.

Kore rug

KORE was well shilled and hyped in Crypto Twitter by influencers, before they exit scammed by calling the mint function to mint new tokens and dumping it on Uniswap to rug pull with a massive 900 ETH ~$346,500 as at when it happened.

 

https://etherscan.io/tx/0xd7e8eb2679c47e3a2ec992d4e72e709d7174063885fa5d8d69b572efbf95a3ce

KPER Network

This project is a clone of Andre Cronje’s KP3R project that stole the headlines last two weeks in the cryptocurrency industry. Please do not confuse KPER with the legitimate KP3R by Andre Cronje.

Kper rug on Dextools

As I stated earlier in one of my articles, that your success in DeFi hugely depends on how early you find a DeFi project to invest in and how fast you exit. This was the story for some KPER investors.

Investors already knew kper was just going to be another rug but if you time your entry and exit properly, you’ll definitely get some returns on your investment. Just like KORE, KPER developer called the mint function and minted 10 million new tokens inflating the total supply.

He then dumped the new minted KPER into the Uniswap pool and dumped the price, emptying all ETH in the pool. KPER developer pulled the rug exiting with 1,837 ETH (~$623,782.28 as at when it happened).

https://etherscan.io/tx/0xb4a01b32a11c11438f4110ca93e5f18cba7962d50ea73ea1bf2a6b0245a042d6

How to avoid being rug pulled

  1. Do not invest in DeFi projects with an anonymous team: the best way to avoid being rug pulled is to stay away from investing in DeFi projects with an anonymous team. Taking this precaution already saves you from being a victim of another rug pull. Andre Cronje’s project did well partly because he was known. It’s like buying Ethereum because you know Vitalik Buterin will not exit scam you.
  2. Do not invest in any DeFi project that is a clone or fork of another project: if it’s a clone or fork of another defi project then it’s not worth investing in. Clones and forks just try to build on present hype of the copied project to lure investors looking to throw their money at anything because of hype.
  3. Verify source codes to look out for mint function: before investing in any DeFi project, another precaution now is to look out for mint function in the source code. I know this can be a bit tricky for average crypto investors that do not know how to read lines of code but through the help of a telegram (@cryptoinvestigation), you can stay on top of your DeFi game and avoid projects with mint function.

Conclusion

The last two weeks was filled with many rug pulls and DeFi investors lost more than $3 million. Another DeFi project that made the headlines was Axion (AXN) formerly known as HEX2T.

According to the Axion team their source codes were exploited by an unauthorized actor despite being audited by top blockchain auditing firms like Certik & Hansen. The hacker minted 79 billion AXN and dumped them on the Uniswap pool. The pool was drained of 1300 ETH ~$500,000.

The mode of operation of these scam DeFi projects are quite identical now. First they lock liquidity to gain trust and subsequently mint millions of tokens to dump in the market.

Axion relaunch count down

Axion plans to relaunch on 11th of this month and they claimed to had already raised over $500k for liquidity. This is the same amount that was stolen when their code was exploited, are you willing to invest in AXN again?