Published 5 months ago • 3 minute read

How to Spot DeFi Scams Quickly

Now that Decentralized Finance is on a roll, it’s easy for malicious actors to launch fake DeFi platforms - it’s a quick way to make some money.

The question is, how do you spot them and back off?

1. Look for info about the developing company

If you don’t see the name of the developing company or the office address anywhere, then it’s a red sign. Because if something bad happens to your account and your assets, you don’t have anybody to sue.

If you find some info, also make sure it is authentic. Can you find information about this company on other websites as well? Can you find the CEO on LinkedIn?

And while you’re here, look for the experience of the team members. Does it look like they are trained to sustain a finance platform?

2. Make sure you can reach for help

If an issue occurs on the platform, it doesn’t instantly mean it’s a scam; bugs happen. But if there’s nobody from the team to help you find a solution, then you should question the authenticity of the platform.

Even if the platform would be authentic, it really doesn’t deserve your energy. Because a platform without assistance is not customer-oriented, which is a red signal. We’re talking about blockchain technology, which is a lot more complex than most other domains.

How to spot Defi Scams Quickly

3. A whitepaper is a must

That’s because anybody can make promises, but authentic DeFi companies explain how everything on the platform works.

Whitepapers and Litepapers contain all the information you need to analyze before choosing a project to invest in. Tokenomics, usability, taxes, features used, and so on. Everything is here so that you can make a decision knowingly.

And if a DeFi company really wants to demonstrate it’s legitimate, it can publish the code on an open-source platform. If you know some coding, you can see for yourself if it’s a scam or not.

4. Look for a roadmap

Very few scam projects can provide their users with future plans. A company that respects itself has a purpose and knows how to get there. Why invest in something that can’t guarantee sustainability?

Having a roadmap doesn’t only demonstrate authenticity but also the fact that the team knows how to maintain its project on top, always looking for market opportunities.

Don’t fall for projects that offer just promises. Look for facts, experience, evidence. And you will be good to go! Picking the best defi projects in 2021 is hard, but in the end only the worthy ones can thrive!

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