Recently, I saw someone ask about this issue in the community, and I think it's necessary to have a good discussion on this topic. You may have also heard of scenarios like this: when a new coin just launches, it becomes extremely popular, the price skyrockets, and the community is very active. But after a few days, the website suddenly shuts down, the founders disappear, and investors are left holding a bunch of worthless tokens. This is called an exit scam, and such scams have caused millions of dollars in losses in the crypto market.

In simple terms, an exit scam is when the project team suddenly withdraws liquidity or outright abandons the project, taking investors' funds with them. There are several common methods. The first is directly withdrawing from the liquidity pool, like on DEXs such as Uniswap or PancakeSwap. The project team first adds liquidity to attract retail investors, then when the token price is pumped up, they withdraw all liquidity at once, leaving the pool empty and the token price dropping to zero. Sometimes this process can be completed in just a few hours.

There are also more covert tactics, embedded directly in the smart contract code. Developers may reserve permissions within the contract to mint new tokens at will, freeze user sell orders, or even transfer tokens directly from user wallets. These contracts sometimes appear to be 'verified,' but malicious code is hidden behind complex logic, only activating once enough investors have entered. I’ve seen some projects where even the audit reports are forged.

Another type involves no code at all—pure social media manipulation. The project team stirs up hype on Twitter, Discord, Telegram, gathers influential figures, and blows things out of proportion. When the hype reaches its peak, they run away, deleting all social accounts overnight. This kind of exit scam is actually the easiest to pull off because it relies entirely on psychological manipulation.

So how can we identify these risks? First, look at whether the project team is transparent. If the founders are completely anonymous with no traceable information, that’s a red flag. Second, check the smart contract audit—projects audited by reputable security firms are generally safer. Third, look at liquidity locking—legitimate projects usually lock liquidity for 1-4 years, demonstrating their intention to build long-term. Lastly, assess whether their promises are realistic—if a project claims to guarantee high returns or is backed by well-known investors but can’t provide proof, be cautious.

My advice is to do your own homework before investing. Read the whitepaper, check token distribution on Etherscan or SolScan, and see if the ownership of the contract has been relinquished. Don’t get carried away by social media hype or influencer recommendations. Prefer projects listed on the official launchpads of major exchanges, as these platforms typically have stricter review processes, reducing the risk of exit scams.

Ultimately, DeFi remains a rapidly evolving field, with new projects launching every day. Regulation is still not fully developed, which gives scammers many opportunities. But as auditing tools improve, our ability to identify risks also increases. The key is to stay vigilant and ask yourself multiple times why a new project is worth investing in. Recently, I’ve been following some related projects and assets on Gate; if you're interested, you can check out the market yourself.