While the new world of decentralization and AMMs offer a range of possibilities, one should also exercise extreme caution here, in what is essentially the wild west in many ways.
Before the $ROUTE token officially launched and did an exclusive launch on BitMax, some bad actors decided to launch a fake token on Uniswap.
Anyone can launch a token on Ethereum and anyone can list it on Uniswap. Such is the beauty of decentralization — that while it’s not protecting the world from corporate interests, it gives a powerful platform to those who wish to deceive. The responsibility is on everyone’s shoulder to make sure that the platforms are used as they are supposed to be.
Now most users try to filter a fake token from a real one by checking what kind of liquidity the token has. For example, recently I found a bot that tries to snipe tokens from Uniswap which have a greater than 100 ETH liquidity. This would have been a nice way in the past, but in the current times — this simply does not work because the bad actors have enough and large liquidity to act and deceive maliciously.
Our fake $ROUTE token on Uniswap was initiated with a liquidity of 400 ETH which is worth nearly $500,000. That is more than the entire fundraise done by the Router Protocol. The attackers have leveled up their game — it’s important that you check the contract address via some official source before you put a dollar in any currency.
This is not all. As these actions are motivated by commercial interests, let’s talk about what the attacker gained from this. After all, he spent nearly $500,000 and deployed an ERC20 token, and listed it on Uniswap. He would have spent nearly $1,000 in Ethereum gas fees while deploying the tokens and adding liquidity.
The attacker managed to withdraw nearly 458 ETH worth liquidity after a few hours. The attacker ended up deceiving nearly $90,000 worth and was able to earn a well-paid professional’s one-year salary in a developed country.
This shows the amount of interest the public had in Router on Uniswap but this also shows the large shortcoming of the system. We must actively do something to ensure such events become a thing of the past. Nearly 40 people were left holding the fake Route token bags as those fake tokens became worthless as soon as the attacker took out all liquidity of Uniswap.
About Router Protocol
Router Protocol is building a suite of cross-chain liquidity infra primitives that aims to seamlessly provide bridging infrastructure between current and emerging Layer 1 and Layer 2 blockchain solutions.
Telegram announcements: https://t.me/router_ann