When decentralized exchanges launched on Ethereum, there was an immediate fear of scammy projects. The growing popularity of DeFi is not helping these matters much. However, even on Binance Smart Chain’s PancakeSwap, rug pulls are not uncommon.
Rug Pulls Remain A Problem
The decentralized nature of DEXes ensures that anyone can provide liquidity to trading pools or even create their own. While it is good to empower users, this also creates a new problem: rug pulls. Nothing prevents developers from creating a token, listing it on a DEX, and then removing all liquidity once the price starts going up. Practices like these are all too standard, unfortunately.
Following Binance Smart Chain’s launch, people had hoped these rug pulls would come to an end. It is not an issue native to one specific blockchain, however. PancakeSwap, the leading DEX on BSC, is home to as many – if not more – rug pulls as Uniswap or Sushiswap. Solving this unfortunate situation will prove extremely challenging.
As AstroTools points out, it is not uncommon to see 50% of new PancakeSwap projects result in rug pulls. A very high and worrisome rate of losing money when blindly aping into the next new listing. Considering how this pertains to a four-hour span, one has to wonder what the damage is on a daily basis.
It is worth mentioning none of these rug pulls have a high number of transactions. That may indicate some scammers grow impatient and expect quicker gratification. Introducing some “buffer” between listing a token and being able to trade might help prevent such incidents from happening in the future. Finding a foolproof solution is not easy, however.
Centralized Approach To The Rescue?
One difference between Ethereum and Binance Smart chain is how the latter ecosystem may be better positioned to deal with rug pulls. More specifically, only a select few node operators would – theoretically – allow the operators to roll back specific transactions, should that need arise.
Whether node operators will ever put such “power” to use, remains unclear. As several DApps on BSC are now on the verge of being censored, an intriguing situation is created. However, one cannot forget the Ethereum developers undid many transactions following The DAO hack many years ago. Such a rollback would not be possible on Ethereum today – hopefully – but the story is different for Binance Smart Chain.
Regardless of how one wants to look at things, rug pulls on DEXes will remain a problem. Whether it is Ethereum, Binance Smart Chain, or any other blockchain, a solution needs to be found sooner or later. Doing so in a decentralized manner is the real problem, though.
Looking to advertise? We will gladly help spread the word about your project, company, or service. CryptoMode produces high quality content for cryptocurrency companies. We have provided brand exposure for dozens of companies to date, and you can be one of them. All of our clients appreciate our value/pricing ratio. Contact us if you have any questions: [email protected]