Over 40 percent of DeFi token pairs may be fraudulent

Rome Blockchain Labs (RBL) has released new research showing that many token pairs on decentralized exchanges (DEXs) may be fraudulent or duplicates. Using its data service, RBL Net, the team analyzed data on over 1,000,000 pairs on Uniswap (ETH) and PancakeSwap (BNB).

In light of the many marketplace crashes and burgeoning fear in the marketplace, due to scandals like FTX and Terra, RBL wanted to investigate how dangerous DeFi really is for the average person. While everyone knows they should Do Their Own Research, how critical is it to really understand the marketplace tikers and symbols prior to investing?

With between 40% and 59% of tokens having duplicate pairs on reputable networks, RBL believes users must be very vigilant when exploring investments. Read on to learn more about the specific findings.

Over 40% of DeFi token pairs may be fraudulent or duplicates, according to Rome Blockchain Labs

Rome Blockchain Labs (RBL) has released new research showing that many token pairs on decentralized exchanges (DEXs) may be fraudulent or duplicates. Using its data service, RBL Net, the team analyzed data on over 1,000,000 pairs on UniswapV2 and UniswapV3 on Ethereum and PancakeSwap on BNB Chain. The research found that of the 190,887 pairs created this year, 81,457 (42.7%) had the same token symbols as another pair as of August 2022. Now, in December of 2022, this has increased to 59.4% of 581 592 Token Pairs.

This phenomenon is likely due to bad actors creating fake tokens with the same ticker as legitimate ones in an attempt to capture assets from unsuspecting traders. However, the research notes that not all duplications are necessarily fraudulent, as legitimate tokens may use the same symbol as a completely different pair.

“Given our data capacity, we wanted to use this information to help prevent new traders from falling victim to scams like I almost did. This research is a reminder that it’s important to do your due diligence and be cautious when trading on DEXs, especially with so many new projects popping up all the time,” said Alexander Szul, co-founder of RBL and BENQI.

Since the original research was completed in August 2022, RBL has continued monitoring the situation with a broader scope. Now, the duplicate pairs are considered from the start date of each exchange (Uniswap V2 – 05/18/20; Uniswap V3 – 05/04/21; PancakeSwap – 09/20/20) and the changes in duplicate pairs are highlighted. These iterations of the research are able to infer:

• The more popular a pair, the more duplicates exist; scammers are praying on people wanting to make quick, uneducated decisions in a high-pressure environment.
• The longer an exchange exists, the more duplicate pairs will exist; users should be vigilant no matter the success, popularity, or authority of a DEX.
• As the ecosystem continues to grow and flourish, so will the potential for being scammed.

RBL will continue to offer insights and statistics quarterly, beginning in January of the New Year.

The full results of the research can be found in the chart below.

Results as of 08/04/22

Pairs created from exchange creation date* to 2022-09-30; Active as of 2022-10-18

Pairs created from exchange creation date* to 2022-11-30; Active as of 2022-12-20