I have received a few questions about what scams are and how to avoid being deceived in the crypto market, so I decided to write this article to share with everyone.

First of all, what is a scam? It’s simply an act of fraud, stealing assets from others. In the cryptocurrency field, scammers are becoming increasingly sophisticated and creative, causing many investors to lose everything.

There are several common types of scams that everyone needs to know. The first is Scam ICO — which exploded in 2017. Its operation is quite simple: bad actors create a cryptocurrency project, promote it with flashy marketing, and even hire KOLs to build credibility. Then they issue tokens through an ICO to raise funds from investors. Once they’ve collected a large amount of money, they abandon the project and disappear with the funds. Signs to recognize this type include projects without clear solutions, anonymous teams, poorly designed websites, or vague roadmaps.

The second type is liquidity rug pull, which often occurs on DEXs like Uniswap or PancakeSwap. Initially, the project looks very professional, but after listing the token, they withdraw all liquidity. Be cautious of projects with low liquidity and promises of excessively high APY.

There’s also the Ponzi scheme model, where later investors pay earlier investors. This is dangerous because when no new participants join, the entire system collapses and investors suffer heavy losses.

In reality, many people know it’s a scam but still participate because of attractive profits. This is very risky.

The way to protect yourself is quite simple: before investing, do thorough research on the project — what is their solution, does the team have experience, how is the tokenomics, and what is the community like. You can check the smart contract to see if the holders and founders show any suspicious signs. Also, when connecting your wallet to any website, make sure it’s reputable and secure, and remember to revoke permissions when no longer needed.

Currently, there are many tools and websites that support project verification to protect your assets. I recommend everyone use them before investing in anything.

In summary, scams are a real threat in crypto, but if you are careful and do your homework thoroughly, you can completely avoid them. Wishing everyone safe investing!