Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls” • Hacker News Board

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#271

Post by mdoms » Thu, Dec 16, 2021, 7:15 PM UTC

JohnJamesRambo wrote: post #201

Animats wrote: post #195

Scams that will collapse in 2022: * Axie Infinity. That's a Ponzi in the collapse phase. Their Smooth Love Potion token is down 90% and in a screaming dive, and their Axie token is down 37% from peak. That one is going to hurt a lot of poor people in the Philippines. Many quit their jobs to play Axie's play-to-earn game. All the money comes from later entrants, so it's a Ponzi by definition. * OpenSea. The NFT market…

How could Smooth Love Potion have failed us? Which brings up my other point, that people know the risks they are taking. Casinos are still legal. Someone that yolos their life savings into Smooth Love Potion was going to lose it some other way. If you don’t know your 100% apy isn’t sustainable in a DeFi ponzi, that’s on you.

> Casinos are still legal.

Depends where you are in the world...

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#272

Post by lupire » Thu, Dec 16, 2021, 7:20 PM UTC

amitkgupta84 wrote: post #258

> The most important takeaway is to avoid new tokens that haven’t undergone a code audit. Code audits are a process by which a third-party firm analyzes the code of the smart contract behind a new token or other DeFi project, and publicly confirms that the contract’s governance rules are iron clad and contain no mechanisms that would allow for the developers to make off with investors’ funds. But how do you know whic…

people say "oh Bitcoin is mature it's 10 years old".

Meanwhile the world is amazed that the United States is so stable at only 200 years old.

And these shitcoins are weeks old. and these aren't new products. Each one is, by design, a new governance structure.

Would you take a vacation or move your life to a country that was invented last week.... by anonymous people?

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#273

Post by lupire » Thu, Dec 16, 2021, 7:24 PM UTC

Animats wrote: post #195

Scams that will collapse in 2022: * Axie Infinity. That's a Ponzi in the collapse phase. Their Smooth Love Potion token is down 90% and in a screaming dive, and their Axie token is down 37% from peak. That one is going to hurt a lot of poor people in the Philippines. Many quit their jobs to play Axie's play-to-earn game. All the money comes from later entrants, so it's a Ponzi by definition. * OpenSea. The NFT market…

> NFT markets don't visibly crash,

That's a really good point. When a meme stock crashes, it crashes down to raw asset value minus transaction costs.

When the raw asset value is less than transaction costs, the price doesn't drop, the liquidity just vanishes, since there is no "negative price" support like there is for assets that are expensive to hold, like oil.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#274

Post by jcrawfordor » Thu, Dec 16, 2021, 7:25 PM UTC

kyruzic wrote: post #219

jcrawfordor wrote: post #136

Earlier quoted context omitted.

Is that really that true any more? From my podunk credit union I have used SWIFT to send overseas and it took under a minute and cost me $20. That's both faster and cheaper than Ethereum transactions. It's costlier than Bitcoin but not that much, and still faster. And that's wire transfer, the expensive bank to bank option... Western Union has been faster than Bitcoin for decades and cheaper for probably a decade now…

An ethereum transaction takes under a minute and costs a few dollars. Transferring funds uses an extremely small amount of gas. You clearly have never used the chain so stop making things up. Here I sent 11K USD to another wallet for a fee of $10. It was confirmed within 5 minutes. There is no other service outside of crypto that is that fast and that cheap. https://etherscan.io/tx/0x3edc74a15742f65d166dfc9ddb567afab…

I'm definitely not that familiar with Ethereum, my thesis research was on Bitcoin but I have been fairly tuned out since then.

But wouldn't confirmations take, as you said, five minutes on a good day? I see people saying 5-20 minutes typical for Ethereum to reach 30 confirmations. And sure you can accept fewer but 30 seems a pretty widely accepted convention. That's still slower than wire transfers which are functionally instantaneous (in practice of course it takes a minute or so). And right when I looked now the base TX fee is $19.10, which is a few dollars lower than I thought, but I see that it fluctuates by a few dollars pretty quickly so it would depend on the moment. I don't know the Ethereum situation with regards to EIP-1559 in very much depth so if I misunderstand how fees currently work please correct me.

This seems to put Ethereum basically right on par with what my credit union charges for wire transfers. Now $20 is on the lower end for wire transfers on a consumer account (I think $25 is common), but you can also get lower on commercial accounts. It just seems like they're fairly on par with each other from a fee perspective, and Ethereum is at least a few minutes slower.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#275

Post by zepto » Thu, Dec 16, 2021, 7:28 PM UTC

JumpCrisscross wrote: post #184

nathanvanfleet wrote: post #141

Earlier quoted context omitted.

Yes let's keep making weird incentives for law enforcement like asset forfeiture. I want police to be like an American ambulance and run my credit card before saving my life.

> let's keep making weird incentives for law enforcement like asset forfeiture I hate civil forfeiture. That’s why I specifically suggested the proceeds flow to the Treasury. Not the law enforcer’s budget. There is also a world of difference between taking something you legally possess, and taking a cut of things returned to you at the expense of the public purse.

The shouldn’t flow to the treasury. They should go directly back to the public.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#276

Post by sk55 » Thu, Dec 16, 2021, 7:29 PM UTC

arcticbull wrote: post #255

babyshake wrote: post #223

Earlier quoted context omitted.

Is that really a fact, that 10% of the value locked into DeFi was stolen this year? I would think that most of the TVL would accrue to the more blue chip protocols (Aave, Uniswap, Compound, etc.) and to my knowledge these haven't been affected much by these big hacks.

DeFi Pulse says there's just under $100B in TVL. [1] About $10B was lost and stolen this past year depending on where you look - $7.7B according to this article, but I saw $10B circulating too. [1] https://defipulse.com/

I don't think DefiPulse has everything. Here's a few more off the top of my head, though I'm sure there is more: - $5.5 billion (TVL on Eth L2s via L2Beat) - $4 billion (ETH 2.0 staking contract) - $17 billion (Polkadot staking) - $16.5 billion (Cardano staking) - $36 billion (Solana staking)

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#277

Post by zepto » Thu, Dec 16, 2021, 7:29 PM UTC

selestify wrote: post #178

zepto wrote: post #171

Earlier quoted context omitted.

It may be technically different, but it’s no different at all for the average consumer who hasn’t done a threat analysis.

In general, one shouldn't "invest" in things one doesn't understand very well.

A fairly meaningless statement in reality, since it’s not how most people behave.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#278

Post by wizzwizz4 » Thu, Dec 16, 2021, 7:29 PM UTC

amitkgupta84 wrote: post #258

> The most important takeaway is to avoid new tokens that haven’t undergone a code audit. Code audits are a process by which a third-party firm analyzes the code of the smart contract behind a new token or other DeFi project, and publicly confirms that the contract’s governance rules are iron clad and contain no mechanisms that would allow for the developers to make off with investors’ funds. But how do you know whic…

> It could be a meaningful technological shift if a lot of the financial infrastructure goes decentralized

It's important to note that “DeFi” is more centralised than our existing financial infrastructure. (Also, our existing infrastructure mostly uses open, public, well-known standards with many implementations; most DeFi stuff… documents how it currently works, I guess? Though it's hard to find that documentation.)

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#279

Post by pcthrowaway » Thu, Dec 16, 2021, 7:30 PM UTC

arcticbull wrote: post #255

babyshake wrote: post #223

Earlier quoted context omitted.

Is that really a fact, that 10% of the value locked into DeFi was stolen this year? I would think that most of the TVL would accrue to the more blue chip protocols (Aave, Uniswap, Compound, etc.) and to my knowledge these haven't been affected much by these big hacks.

DeFi Pulse says there's just under $100B in TVL. [1] About $10B was lost and stolen this past year depending on where you look - $7.7B according to this article, but I saw $10B circulating too. [1] https://defipulse.com/

The article's figures include the centralized Turkish exchange which made off with ~2.6B , so I don't think it's fair to consider it the same kind of thing.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#280

Post by optimalsolver » Thu, Dec 16, 2021, 7:32 PM UTC

tromp wrote: post #182

mdoms wrote: post #144

Earlier quoted context omitted.

100% of Crypto "investors" are speculators looking for a quick buck by investing in a system that is pumping needlessly huge amount of carbon into the atmosphere. They're not well-meaning victims who stumbled into the bad part of town, they are greedy thoughtless people in search of free money.

These rug-pull scams rely on the developers having tons of tokens to sell to investors, which is mostly confined to use of Proof of Stake. So your environmental criticism of Proof of Work is not applicable here. A PoW coin with no premine doesn't allow for a rug pull.

What are some notable proof-of-work tokens that didn't have a premine?