Research conducted by Blockchain security firm Hacken reveals that the majority of crypto projects that engaged in rug pulls during the third quarter of 2023 did not have audit reports. The Q3 2023 Security Insights report found that out of the 78 rug pulls examined, only 12 had conducted and reported audits.
An audit by an independent third-party offers a comprehensive review of a token, identifies vulnerabilities in the project, and alerts investors to any potential risks. Rug pulls, which are scams where liquidity is suddenly withdrawn from a project, can be easily prevented by investors if they pay attention to certain patterns. One such pattern is the presence or absence of an audit.
However, it is important to note that an audit does not guarantee protection from a rug pull. Even if a project undergoes an audit and publishes a report, it can still make malicious changes to its tokenomics and smart contract, defrauding users. Some of the projects that were rug pulled in the last quarter had undergone audits but received poor scores. Unfortunately, users ignored the audit results, believing that the fact that the projects were audited was enough.
One example is Magnate Finance, a lending protocol based on Coinbase‘s Base network. The project had an audit that stated the project’s deployer could manipulate the token. Despite this warning, users continued to participate in the protocol for almost three months before the deployer eventually removed liquidity from LPs in multiple transactions, resulting in a rug pull that stole over $5 million.
A similar experience was seen with users of the decentralized crypto staking platform DeFiLabs. An audit by blockchain security firm CertiK warned of centralization risks within the platform’s contracts, but users did not take the warnings seriously. Eventually, the platform pulled the rug and disappeared with $1.4 million worth of users’ assets.
Hacken’s research also identified a common pattern among rug pulls. Malicious project developers typically follow five steps: creating the Tokens, aggressively marketing them, inflating the token supply when liquidity accumulates, vanishing with drained funds, and leaving investors with worthless assets.
In conclusion, the research conducted by Hacken highlights the importance of audit reports in the crypto industry. While audits can provide valuable insights and help identify potential risks, they do not guarantee protection against rug pulls. Investors need to be vigilant and consider more than just the presence of an audit when evaluating crypto projects..
#Projects #Rugpulled #Audited #Report
An audit by an independent third-party offers a comprehensive review of a token, identifies vulnerabilities in the project, and alerts investors to any potential risks. Rug pulls, which are scams where liquidity is suddenly withdrawn from a project, can be easily prevented by investors if they pay attention to certain patterns. One such pattern is the presence or absence of an audit.
However, it is important to note that an audit does not guarantee protection from a rug pull. Even if a project undergoes an audit and publishes a report, it can still make malicious changes to its tokenomics and smart contract, defrauding users. Some of the projects that were rug pulled in the last quarter had undergone audits but received poor scores. Unfortunately, users ignored the audit results, believing that the fact that the projects were audited was enough.
One example is Magnate Finance, a lending protocol based on Coinbase‘s Base network. The project had an audit that stated the project’s deployer could manipulate the token. Despite this warning, users continued to participate in the protocol for almost three months before the deployer eventually removed liquidity from LPs in multiple transactions, resulting in a rug pull that stole over $5 million.
A similar experience was seen with users of the decentralized crypto staking platform DeFiLabs. An audit by blockchain security firm CertiK warned of centralization risks within the platform’s contracts, but users did not take the warnings seriously. Eventually, the platform pulled the rug and disappeared with $1.4 million worth of users’ assets.
Hacken’s research also identified a common pattern among rug pulls. Malicious project developers typically follow five steps: creating the Tokens, aggressively marketing them, inflating the token supply when liquidity accumulates, vanishing with drained funds, and leaving investors with worthless assets.
In conclusion, the research conducted by Hacken highlights the importance of audit reports in the crypto industry. While audits can provide valuable insights and help identify potential risks, they do not guarantee protection against rug pulls. Investors need to be vigilant and consider more than just the presence of an audit when evaluating crypto projects..
#Projects #Rugpulled #Audited #Report
