Trade or Trick?

Abstract

The prosperity of the cryptocurrency ecosystem drives the need for digital asset trading platforms. Beyond centralized exchanges (CEXs), decentralized exchanges (DEXs) are introduced to allow users to trade cryptocurrency without transferring the custody of their digital assets to the middlemen, thus eliminating the security and privacy issues of traditional CEX. Uniswap, as the most prominent cryptocurrency DEX, is continuing to attract scammers, with fraudulent cryptocurrencies flooding in the ecosystem. In this paper, we take the first step to detect and characterize scam tokens on Uniswap. We first collect all the transactions related to Uniswap V2 exchange and investigate the landscape of cryptocurrency trading on Uniswap from different perspectives. Then, we propose an accurate approach for flagging scam tokens on Uniswap based on a guilt-by-association heuristic and a machine-learning powered technique. We have identified over 10K scam tokens listed on Uniswap, which suggests that roughly 50% of the tokens listed on Uniswap are scam tokens. All the scam tokens and liquidity pools are created specialized for the "rug pull" scams, and some scam tokens have embedded tricks and backdoors in the smart contracts. We further observe that thousands of collusion addresses help carry out the scams in league with the scam token/pool creators. The scammers have gained a profit of at least $16 million from 39,762 potential victims. Our observations in this paper suggest the urgency to identify and stop scams in the decentralized finance ecosystem, and our approach can act as a whistleblower that identifies scam tokens at their early stages.

Sosyal Medyada Kripto Para: Coin Piyasasına Yönelik Dijital Söylemin Analizi

“…-Uniswap (UNI): Launched in 2018, Uniswap is a popular decentralized trading protocol known for its role in facilitating automated trading of decentralized finance (DeFi) tokens (Xia et al, 2021).…”

Short Paper: DeFi Deception—Uncovering the Prevalence of Rugpulls in Cryptocurrency Projects

“…There exists a burgeoning research direction in measuring exit scams on blockchains. Mazorra et al [8] and Xia et al [17] both detect over 10,000 rugpull scam tokens on the Uniswap platform, which defrauds users out of millions of dollars. Mackenzie analyzes cryptocurrency scams through a criminological lens and divides rugpulls into two types: slow and fast [7].…”

Characterizing Cryptocurrency-themed Malicious Browser Extensions

“…Due to their investment nature, cryptocurrencies have also been abused as baits to attract users to click links containing malicious contents or install malicious applications, as shown by previous studies [90][91][92]. Malicious behaviors covered up by cryptocurrencies may include phishing, scamming, mining and advertising.…”

“…Identifying Colluding Addresses. Starting from each seed address, we expand our address list by monitoring those controlled by the same entity, known as the malicious-by-association [90]. For example, if a seed address transfers coins to another address immediately after receiving incoming payments from victims, we treat the two addresses as colluding addresses and consider that they belong to the same attacker.…”