98% of projects listed on Uniswap are scams (study)

A new study has found that almost all crypto projects listed on Uniswap between 2018 and 2021 were malicious and scam-related.

The study, entitled DO NOT RUG ON ME: ZERO-DIMENSIONAL SCAM DETECTION, was conducted by three researchers; Bruno Mazorra, Victor Adan and Vanesa Daza from the University of Pompeu Fabra and the University of Barcelona.

Could Uniswap be hosting fake projects?

Uniswap was created in 2018, and the protocol describes itself as a growing network of decentralized finance applications (DeFi).

DEX has more than 40,000 Ethereum smart contract (ER20) compatible tokens on its platform to provide users with options to trade various cryptoassets. Over the years, Uniswap has become one of the most significant DeFi protocols in the industry, processing more than $1 trillion in trading volume since its inception.

While Uniswap is the biggest DEX in crypto, recently findings by researchers shows that 98% of all projects listed in the protocol between 2018 and 2021 were carpet covers.

Rug pull is a popular technique used by fraudsters to defraud DeFi investors. They develop new projects, create marketing hype and abandon the project while running away with the investors’ funds.

The study found that Uniswap’s simplicity and lack of regulation make it a target for malicious actors to effectively conduct initial coin offering (ICO) fraud by listing non-valuable tokens on the platform.

The researchers examined 27,588 tokens, of which 631 were classified as non-malicious and 26,957 were identified as malicious. A total of 24,870 tokens marked as malicious are quick moves, while the remaining 2,087 are not LP burns.

The result was compiled by generating the history of all tokens listed on the platform from launch to 2021 using an Infura archive node 18 and the Etherscan API 19 for analysis and labeling.

“To get the status of the Uniswap exchange and tokens, we used the events produced by their respective smart contracts. Any node connected to the Ethereum JSON-RPC API can observe these events and act accordingly. Events can also be indexed so that the event history is searchable later, said scientists.

The Crypto Community Responds

As expected, the latest investigation received backlash from the crypto community after it was shared on Twitter by crypto advocate Drnick.

A Twitter user questioned the effectiveness of the survey, noting that the model used to conduct the research needed the inclusion of the token’s liquidity/volume.

Sorry, but that’s one hell of a flawed methodology for that claim. They literally took ALL tokens since 5/20 – 27k total and didn’t bother to filter them by liquidity/volume…anything.
That’s like saying 97% of Twitter accounts are fake, but none were active in the last year

— Maya Zehavi (@mayazi) 31 October 2022