The Uniswap Defi Exchange got swamped with Scam tokens because of its weak “listing” policy, allowing fake coins to impersonate legitimate DeFi protocols, as we are about to read some more in the upcoming crypto news today.
Any user is able to import a token and list a coin on Uniswap after pasting the addresses into Uniswap’s menu. 1inch.exchange Tornado. cash, bZx, and dYdX are some of the companies whose fake tokens were listed on Uniswap. Scam tokens impersonate legitimate Defi projects that have been running rampant on UniSwap as the decentralized exchange allows users to import tokens by pasting the address into Uniswap’s swap menu but it is unclear how many traders were scammed into trading with fake coins because the exchange is not able to prevent fake listings.
Uniswap got a lot of popularity in the past year as more DeFi projects were built on Ethereum, and the protocol provides automated liquidity provision on Ethereum driving what could be described as “unstoppable” liquidity for hundreds of applications. However, these features also seem to attract many scammers. According to a report from Defi Prime, there could be a lot of coins on the platform that impersonates legitimate projects and trick users into swapping their funds for a worthless token.
Balancer, a non-custodial portfolio manager was among the first to notice this scam as the company instantly warned its users about the Balancer Token on Uniswap saying it was not affiliated with the company. The BAL token was the only contract that is valid for Balancer. Curve Finance, another on-chain liquidity provider also noted a fake token on Uniswap as they too don’t have a token yet. Tornado. cash, dYdX, and 1inch.exchange are some of the protocols that have seen their “coins” listed on Uniswap.
⚠️⚠️⚠️ The Balancer (BAL) token 0x6cb8… on uniswap is a SCAM. BAL has not been created yet ⚠️⚠️⚠️
We'll announce here when the official token gets deployed.
— Balancer Labs (@BalancerLabs) June 13, 2020
The increase in scam coins on Uniswap is a direct consequence of the weak listing protocol that the platform has. All tokens that deployed tokens on the exchange are supported on the platform’s front-end. That means that the users can paste the token address into the search box and populate the dropdown with the token. For a token to be listed, an inclusion request on GitHub is required. The problem attracted the attention of many and they all agreed that some kind of threshold is needed to protect them.
However, others argued that scams are a natural result of a decentralized system that it is up to the users to do due diligence before interacting with the protocol. The listing process on centralized exchanges is much more labor-intensive and includes a long vetting process for each coin.
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