It's important to be aware that the cryptocurrency space still has its fair share of bad actors. To assist new investors, we have compiled a useful list highlighting key warning signs to watch out for. Please note that this is not professional financial advice.
Indications of a bad project
- Really high hardcaps for meme projects.
- Long presale end times of more than two weeks are generally suspicious, except for projects that have already proven to be trustworthy.
- Avoid anything that has a softcap that is less than half the hardcap
- Avoid anything with a higher DEX listing rate than presale rate -> The price for the token will be cheaper on the DEX.
- Avoid anything that has a DEX listing rate that is half or less of the presale rate -> You get fewer tokens per BNB on the DEX than presale.
Most projects use whitepapers to introduce their token to the masses, but not all whitepapers are created equally. If a whitepaper consists of only two pages filled to the brim with buzzwords, you’re probably looking at something too grand to be true. If you happen to find one with a sound argument, technical analysis, and a potential use case without the flashiness of marketing-speak, there might be more to it.
- Who’s the team behind the project?
Imagine earning a stellar reputation through hard, honest work. Now imagine losing it all, just because you wanted to make an extra buck by scamming other people. Doesn’t make much sense, right? People with a good track record have skin in the game and thus are likely less incentivized to just take the money and run. Check if there is any information (e.g. LinkedIn) available and if they have been involved in other projects before.
- Professional online presence
Creating a proper online presence takes time and effort. This correlates with higher costs to the project. Scams are usually designed to be as low-cost/high-yield as possible, so homepages are oftentimes not a priority. That doesn’t mean scammers don’t have them, but most of them are at best rudimentary.
Pro tip: A lot of scammers just recycle the assets used for their homepages. If you experience a mild case of déjà-vu, be more vigilant.
- Active community support / Voice and video chats
All scammers are liars, but luckily, most of them are really bad at it. Being able to constantly convince people about the alleged greatness of a foul project is a tall order. So most sketchy projects avoid active community support altogether to dodge the sustained scrutiny that comes with it. If you still get the opportunity and have doubts: Feel free to ask hard questions.
-Web Resources for Research
There are many useful websites for investigating projects. If you want to check for possible rug pulls we recommend sites like “tokensniffer”, “bscheck”, or “poocoin”. Just insert the contract address of the project and let the results speak for themselves. Another important metric is how many tokens sit in how many, or few, wallets. To check for that you can use “bscscan” or “etherscan” with the same method. Too many big wallets mean a higher chance of big dumps. So be aware of that. Emergency Withdraw:
This will allow any user to withdraw their contributions up until the last 10 minutes of a DxLaunch Sale or prior to a sale being finalized. Withdrawing contributions early will cost a 20% fee which will be deposited to the buyback and burn contract. The purpose of the function should only be used in an extreme scenario and will relieve pressure on users flooding our social media chats to request cancellation. All users now have multiple opportunities to research and re-think their investment prior to the finalization. The responsibility will now be 100% on the user to make a well-researched decision on their investment. The fee is necessary to prevent abuse of the feature.