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

blog.chainalysis.com

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

#341

Post by jack_pp »

erichocean wrote: post #220
vmception wrote: post #176

Earlier quoted context omitted.

It moves the needle. the predictable alternative is that I get into an argument about liquidity with someone that doesn't know this market. the predictable thing is to pull up an article from 5 years ago about the thinness of the crypto market, because google tells you what you want to see. the predictable thing is to not know about large OTC trades done specifically to show the depth of the market, or not know about…

If you're kicking ass at crypto, why TF are you commenting on HN? Something doesn't add up.

Elon Musk must be such a loser wannabe for hanging out with comedians and not working 24/7

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

#342

Post by chrisweekly »

arcticbull wrote: post #253
chrisweekly wrote: post #222

Earlier quoted context omitted.

I like your take on it. But 7% inflation? Got a source you could cite?

I do believe the medium-term inflation goal of 2% will be reached, and that this is simply a function of supply chain disruptions. I was using the most recent CPI data. You can also get a 7% yield on treasury Series I bonds. [1] [1] https://www.treasurydirect.gov/indiv/products/prod_ibonds_gl...

Thanks (TIL)

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

#343

Post by chrisweekly »

nradov wrote: post #242
chrisweekly wrote: post #222

Earlier quoted context omitted.

I like your take on it. But 7% inflation? Got a source you could cite?

The current annualized US consumer price inflation rate is 6.8%. https://www.cnbc.com/2021/12/10/consumer-price-index-novembe...

Thanks (TIL)

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

#344

Post by chrisweekly »

ineptech wrote: post #238
chrisweekly wrote: post #222

Earlier quoted context omitted.

I like your take on it. But 7% inflation? Got a source you could cite?

The exact value of inflation this year is controversial and depends a lot on how you measure it, but you can replace it with 6 or 8 or whatever you think the correct value is without altering their point.

Agreed. Thanks for your response. I'd thought it was closer to half that, glad to have a bit of of ignorance remedied. :)

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

#345

Post by dang »

vmception wrote: post #102
alex_young wrote: post #86

The $7.7B part is a bit hyperbolic right? A lot of value of crypto is based on a small volume of transactions to cash which give a number to the entire asset. If I create 1B secret numbers, sell one for $1, and someone steals the rest, is anyone really out a billion dollars?

lol sure if that helps you sleep at night about the decisions you've made in your life thus far. it's not hyperbolic, there is a lot of liquidity in this multi trillion dollar market. although if you're asking this question, the next point might dilute my prior point to you, but a reality is that many people aren't seeking fiat. They don't want dollars. They want more crypto. For physical goods and services there are…

Please don't cross into personal attack. I don't want to have to penalize your account again.

https://news.ycombinator.com/newsguidelines.html

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

#346

Post by erulabs »

wizzwizz4 wrote: post #329
erulabs wrote: post #323

Earlier quoted context omitted.

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”?

You appear to be enraged that a specific open-source project you chose doesn't have good enough documentation for a specific feature you want, which is not the main aim of the project. Not sure I can help. Additionally, all the answers to your question are contained in my first comment.

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

#347

Post by janmo »

_6hmp wrote: post #75
janmo wrote: post #44

And there are many ponzis out there. Celsius Network ($25billion) being the biggest one. Read more: https://rorodi.substack.com/p/the-biggest-crypto-lending-com...

There are definitely ponzi schemes in defi, but I'm not sure celsius is one just because they pay what seem on face to be impossible rates. Gemini, which is regulated and based out of NYC, offers 8% on GUSD, their USD stablecoin. My understanding is returns on this come from a huge demand for crypto lending from institutions participating in the "basis trade", and a limited supply of USD lending available to them for…

They claim to make 20-40% APY risk free. Just LMAO right now. There is no such thing as 20-40% APY risk free, if you think you can get such returns risk free you must be a total fool.

I am unsure how they are doing it but I presume they are using a technique similar to the "Arbitrage in Dual Classes" for stocks. Basically you bet that the price of the class A and the class B of a stock will eventually merge to the same or a very similar price. In this case I think they do this with the BTC spot and future price.

This technique worked well for stocks until 2008 when they all got REKT in the Volkswagen Class A stock short squeeze and lost everything. One guy went from billionaire to broke within one day and jumped in front of a train... I have the sad feeling this is going to happen again.

As a bonus, Celsius also claims to do Rehypothecation, the thing that caused the subprime crisis.

Have fun "unbanking" yourselves.

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

#348

Post by contravert »

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.

Although smart contract audits are pretty much security theatre where the auditor charges $10k-$30k to run your code through a program, rug pulls are way more common just through simple methods.

A few common ways:

1. Use your admin privilege to withdraw or upgrade the smart contract to drain the funds

2. Withdraw all liquidity for your token and disappear

3. Sell the entire token supply all at once, which is functionally equivalent to (2)

4. Pretend to get "hacked" and lose your private key

5. Program a backdoor into the smart contract (the least common way). Some of these are economic in nature (e.g. frontrunning), which can't necessarily be found in an audit

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

#349

Post by hammyhavoc »

Daishiman wrote: post #249
chrisco255 wrote: post #227

DeFi market cap one year ago was probably less than $7B. Now it's over $100B. That is value that has been created. Crypto is a worldwide, 24/7, permissionless market. It's likened to the wild west. There have been numerous rug pulls, but if you focused all your energy on snake oil salesmen and gangsters in the West, you'd miss the fact that there was real, sustainable value there. A lot of people left Bitcoin after t…

What value was grown? The only thing that has been shown to have "value" is playing around with interests and staking to create unsustainable returns on speculation, nothing else, which I guess if you're into financial speculation can count as such. Who's actually using these coins to do anything in the real world?

Nobody.

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

#350

Post by vmception »

alex_young wrote: post #86

The $7.7B part is a bit hyperbolic right? A lot of value of crypto is based on a small volume of transactions to cash which give a number to the entire asset. If I create 1B secret numbers, sell one for $1, and someone steals the rest, is anyone really out a billion dollars?

it's not hyperbolic, there is a lot of liquidity in this multi trillion dollar market and also enough recipients don't want dollars.
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