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”

#321

Post by rchaud » Thu, Dec 16, 2021, 9:12 PM UTC

tenebrisalietum wrote: post #297

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…

In the US: financial -> 2008 subprime loan crisis, recent inflation groceries -> couldn't buy toilet paper at the start of the pandemic, still some lingering supply issues, prices going up restaurants -> many not open reliable hours anymore, many closing medical -> costs way too high and continue to rise, hospitals oversaturated with patients from time to time, nurses quitting All of it is ultimately backed by laws,…

What aspects of DeFi look attractive exactly? Yield of some digital coin which only has value relative to a fiat currency?

Your local bank at least complies with regulations that cap transaction fees for your chequing account. Meanwhile, ETH gas fees are completely unpredictable, and can easily be higher than the amount you're transferring.

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

#322

Post by BoppreH » Thu, Dec 16, 2021, 9:18 PM UTC

spyder wrote: post #295

BoppreH wrote: post #24

This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many…

If someone uses your credit card or other account info to withdraw cash then the bank cannot reverse that, similarly to crypto transactions. The protection is having an insurance fund to reimburse affected clients. Crypto projects can do the same thing but they rarely do it yet. There are projects like nexusmutual.io where you can get covered against smart contract failure & exchange hacks. But even if you would be m…

That's a really cool project with its democratic claim assessment, and I admire their transparency. But as with everything related to safety in crypto, today it's still based on optimism.

For example, today the 5-member Advisory Board has unilateral power to change the contract as they see fit[1], and only the smart contracts have been audited, not the organization itself[2].

The only information about this all-powerful Advisory Board is on the home page, and I'm forced to take that at face value. What happens if I put my money there, the board runs away with it, and I try to sue them only to find out that these five people don't exist, or are not related to the project? This is far from the basic security level of any traditional financial institution.

Again, I have major respect for this team. The service is useful, and the documentation is honest and comprehensive. But a blockchain plus this insurance does not make a safe consumer space.

[1] https://nexusmutual.gitbook.io/docs/users/understanding-nexu... [2] https://nexusmutual.gitbook.io/docs/welcome/audits-and-secur...

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

#323

Post by erulabs » Thu, Dec 16, 2021, 9:24 PM UTC

wizzwizz4 wrote: post #305

spinny wrote: post #282

Earlier quoted context omitted.

have you tried google?

If you know where the documentation for the most popular DeFi system, Bitcoin, is, then by all means share it. • What does the peer-to-peer network protocol look like? • How do I make a transaction / mine a block? I know how to do this using end-user wallet applications, but the open protocols are so very well documented that I'm sure you can find this information easily. The pages that show up in search results[0][1…

Calling Bitcoin defi slightly stretches the definition. Typically defi relates to smart contracts - of which there is plenty of documentation, and which is vastly -not- built on Bitcoin. Saying “Bitcoin is defi and look, no defi docs!” is ignorant and best and aggressively disingenuous at worst. Yes BTC is decentralized finance, but it’s not the same as “DeFi” strictly speaking.

If you want to read some “DeFi docs”, there are PLENTY - you can start here: https://docs.soliditylang.org/en/v0.8.10/

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

#324

Post by dcist » Thu, Dec 16, 2021, 9:25 PM UTC

theogravity wrote: post #307

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…

A lot of DeFi scams claim that an auditing company has audited their code. There's also scam auditing companies too that work with these DeFi scams to add to the false legitimacy.

What are the scam auditing companies?

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

#325

Post by rchaud » Thu, Dec 16, 2021, 9:25 PM UTC

JumpCrisscross wrote: post #187

opportune wrote: post #109

Earlier quoted context omitted.

Fair game and valid according to whom? You cannot legally rob a bank just because they left it unlocked and unmanned. It might be possible to take crypto due to a bug in a protocol, and arguably justifiable, but that doesn’t mean it would hold up in court if you were identified as the one using the exploit.

> You cannot legally rob a bank just because they left it unlocked and unmanned Nobody suggested making crypto crimes legal. Just metering the degree to which law enforcement, a public good, is put to use pursuing it. Why should a law-abiding saver bail out what in many cases looks like a gambler’s foray?

> Why should a law-abiding saver bail out what in many cases looks like a gambler’s foray?

Because having an idea about how these frauds are committed are helpful for society as a whole. Law enforcement investigating such crimes is the first step towards meaningful laws and regulations.

Acting as though these crimes never happened because they're not enshrined somewhere in the criminal code is cutting off one's nose to spite the face. The negative externalities will still be there, and they will land squarely at society's doorstep. We will all have to foot the bill one way or another.

Everyone's a rugged individualist until they get rugpulled.

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

#326

Post by rchaud » Thu, Dec 16, 2021, 9:28 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.

Well there's always SafeMoon, a name you can trust.

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

#327

Post by wizzwizz4 » Thu, Dec 16, 2021, 9:29 PM UTC

spinny wrote: post #311

wizzwizz4 wrote: post #305

Earlier quoted context omitted.

If you know where the documentation for the most popular DeFi system, Bitcoin, is, then by all means share it. • What does the peer-to-peer network protocol look like? • How do I make a transaction / mine a block? I know how to do this using end-user wallet applications, but the open protocols are so very well documented that I'm sure you can find this information easily. The pages that show up in search results[0][1…

"How do I make a transaction / mine a block?" that's a "how does it works ?" kind of question, you need to know how all the small parts work to explain the functionality. Yes, some aspects you need to look at the code, others you will find documented i would recommend https://learnmeabitcoin.com/ which has very in-depth resources but it seems to be down at the moment

> you need to know how all the small parts work to explain the functionality.

I know how all the small parts work. It's not new technology. I just don't know how Bitcoin does it! To mine a block, you:

• collect a load of transactions (somehow)

• validate them (the obvious stuff, plus the special transaction type requirements, plus unspecified “consensus“ magic I can't find anywhere)

• put them in a block (somehow) along with the hash of the most recent block

• keep changing a certain bit of the block until SHA256(f(SHA256(block))) is low enough (with some f: digest → bitstring)

But I can't fill in the gaps.

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

#328

Post by dcist » Thu, Dec 16, 2021, 9:36 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.

Where do you think the budget comes from?

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

#329

Post by wizzwizz4 » Thu, Dec 16, 2021, 9:58 PM UTC

erulabs wrote: post #323

wizzwizz4 wrote: post #305

Earlier quoted context omitted.

If you know where the documentation for the most popular DeFi system, Bitcoin, is, then by all means share it. • What does the peer-to-peer network protocol look like? • How do I make a transaction / mine a block? I know how to do this using end-user wallet applications, but the open protocols are so very well documented that I'm sure you can find this information easily. The pages that show up in search results[0][1…

Calling Bitcoin defi slightly stretches the definition. Typically defi relates to smart contracts - of which there is plenty of documentation, and which is vastly -not- built on Bitcoin. Saying “Bitcoin is defi and look, no defi docs!” is ignorant and best and aggressively disingenuous at worst. Yes BTC is decentralized finance, but it’s not the same as “DeFi” strictly speaking. If you want to read some “DeFi docs”,…

Bitcoin does have smart contracts; it has its own bytecode language. What about it isn't “DeFi”?

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

#330

Post by opportune » Thu, Dec 16, 2021, 10:07 PM UTC

JumpCrisscross wrote: post #187

opportune wrote: post #109

Earlier quoted context omitted.

Fair game and valid according to whom? You cannot legally rob a bank just because they left it unlocked and unmanned. It might be possible to take crypto due to a bug in a protocol, and arguably justifiable, but that doesn’t mean it would hold up in court if you were identified as the one using the exploit.

> You cannot legally rob a bank just because they left it unlocked and unmanned Nobody suggested making crypto crimes legal. Just metering the degree to which law enforcement, a public good, is put to use pursuing it. Why should a law-abiding saver bail out what in many cases looks like a gambler’s foray?

I am not sure what you mean by “bail out”. When something gets stolen from you, the government doesn’t repay you for the actual amount. They do pay to litigate/make litigation possible. That is part of the societal contract - if you own something and someone takes it from you, the court system exists so you have legal means of restitution. I don’t really care about whether that’s good or not to apply to crypto, I am merely pointing out that it does.