How do I know if I have been a victim of a liquidity mining scam?

Asked 2 years ago

I received a voucher for 5 Ethereum on a dApp called on Coinbase. To get that Ethereum, I needed 60k deposited in my wallet. I deposited 55k, and not too long after that. I received a "miner's fee." which asked me to pay $13 ETH. I couldn't exit it. I tried restarting everything, but it wouldn't go away. So I ended up paying for it, and a few seconds later, all my funds in the account disappeared. I have reached out to Coinbase, Tether, and the IC3. The question is, how do I prevent this from happening again?

Odin Knapp

Thursday, March 24, 2022

First of all, sorry about what happened to you. Losing one's funds isn't a joking matter.

Despite being one of the fastest-growing sectors in crypto, the DeFi space is still largely unregulated.

It can be unforgiving if you don't apply necessary safety measures when investing in protocols. The high APY rates are one of the driving factors for DeFi, but it is also one of the tools bad actors use to lure in suspecting victims.

That being said, taking necessary measures before investing in yield farming pools is of extreme import.

Pay attention to the farm before investing. If you observe a weird token pair within the pool, it could be a sign that someone is trying to rug pull you.

Sometimes, while hiding behind the comfort of anonymity, shady developers may add malicious code lines to steal users' funds. Perhaps this is what happened in your case.

To avoid this next time, you need to do your due diligence before committing to any yield farm.

Here are some ways you can do this:

  • Lookup the project's founders and team, make sure they are real people who are also reachable in case things go south.
  • Do thorough research on the yield farm. Spend time looking at the smart contract code and GitHub repositories. Check social media, see what other farmers are saying about the pool and pay attention to their experiences.

Avoiding scams takes a lot of hard work and research. Don't be fooled by the unrealistically high returns some yield farms offer and don't be a victim of FOMO. When you find a project that interests you, you have to sit down and do the proper research before making any commitments.

Josiah Makori

Josiah Makori

Tuesday, October 04, 2022

To prevent ETH mining liquidity scams:

Acknowledge that investors in valid liquidity mining pools deposit assets into the platform and later withdraw them, plus the generated returns. Watch out for pools that do otherwise. Again, returns are typically tied to crypto market fluctuations in particular tokens or pairs in a legitimate liquidity pool.

Be cautious when learning about liquidity mining pools online. Scam websites or apps are generally not advertised online, nor are they permitted to be indexed by WebCrawlers from search engines like Google. Moreover, proof checks the spelling of web addresses, websites, and email addresses that appear genuine but imitate legitimate websites.

If you aren’t sure about the legitimacy of the domain, don’t connect your web3 wallet or send any funds.

Authenticate all links sent from known and unknown contacts before clicking.

Often leverage a third-party token allowance checker to establish whether you have inadvertently allowed any sites or apps to access your wallet.

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