Researchers claim that 97.7% of tokens launched on Uniswap are rug pulls. Crypto Twitter has some thoughts on this.
Only 631 Out of 27,000 are Non-Malicious
As part of this study, researchers built upon a study from 2021 that used machine learning to analyze transaction data and find Uniswap tokens that were fraudulent. However, based on that algorithm, suspect tokens were only identified after scams had already taken place.
A new study claims to have added 20,000 more token transaction records, analyzed the data manually, and developed machine learning methods that can “detect potential rug pulls before they” happen with 99% accuracy.
Meaning from 27,000 tokens that were analyzed, only 631 were found to be “non-malicious.” or not a scam.
During a rug pull, a developer releases a token, makes it seem as though there is a roadmap for future development, then sells the tokens on those empty promises before disappearing with the funds.
According to a 2021 CipherTrace report, rug pulls were a significant part of the $2 billion in total stolen in 2020 before bridge chain hacks became a $2 billion problem.
Multidisciplinary Digital Publishing Institute published the paper in March 2022. Despite that, the draft preprint circulating on Twitter after Nick Almond, the Protocol Lead of FactoryDAO, shared it on Monday might not indicate that.
“According to this research 97.7% of tokens launched on @Uniswap were rugs,” said Almond on Twitter.
— drnick 🗳️² (@DrNickA) October 31, 2022
Too Easy To Create and List New Tokens on Cryptocurrency Exchange
As a reply to Almond’s tweet, Mark Zeller, a vice president of the DeFi committee at L’Adan, a French industry group for digital assets, noted that the regulators there received a lot of criticism for lowering the minimum capital requirement to register a limited liability company to €1.
As a comparison, he compared it to how fast and inexpensive it can be to list new tokens on crypto exchanges such as Uniswap.
A number of people were concerned that the French LLC registration change would make it too easy for “idiots and con artists” to register seemingly legitimate businesses.
“A lifetime ago my country passed a law to lower the capital needed to create a company to 1€. Back then ppl said “idiots and con-artists will launch companies bad idea!”. that was true, what was also true is that some of these 1€ companies are now unicorns (internet boom & all),” said Zeller.
a lifetime ago my country passed a law to lower the capital needed to create a company to 1€.
back then ppl said "idiots and con-artists will launch companies bad idea!"
that was true,
what was also true is that some of these 1€ companies are now unicorns (internet boom & all)
— Marc Zeller 👻 💜 🦇🔊 (@lemiscate) October 31, 2022