Count the red flags!
There are many signs of something bad is happening in the NFT space,
that you can make a game from it — set your number of red flags as a threshold beyond which you will not support the project. In case any of the lines match the project you are researching or you already minted, don’t panic (yet), count the red flags! Scams and rugs usually match more than one.
What is a scam?
A scam or confidence trick is an attempt to defraud a person or group by gaining their confidence, by Wikipedia. So the scammer planned the attack and did everything to seem legit and safe to gain your trust and stole your NFTs or liquidity and they want to harm you as possible.
What is a rug or rug pull?
A rug pull is a malicious maneuver where developers abandon a project with investors’ funds taken. There could be a project, which has good intentions and idealistic plans, but the minting went wrong or at some point, something went wrong and the morality of the devs wasn’t strong enough to say sorry, give back the money and try something else. Rather they just run away. But still — rug pull could be planned too, but the main point is to gain liquidity and then leave, or fake the higher value of token asset or currency attached to the project and then its sold by developers for profit.
Always check the links
Link to the project website, Twitter, Discord, Instagram, all could be potentially compromised.
The latest example (just a letter changed in URL):
Legit project website: invisiblefriends.io
SCAM project website: invislblefriends.io.
Almost a perfect quick–scam for people who don’t take a second to read or check out basic info. The fake minting counter keeps rising to make pressure on you to take quick action.
Project team check
Let’s do a little social engineering here.
Typical red flags
– The team is completely anonymous
– The team seems to be legit, but no link outside of the website is attached
– The team seems to be legit, even have a Twitter or Instagram — but its a few weeks old, no followers (at just a few), and no history
– Try to google name or nickname, if it matches a source somewhere else
– Try to google a photo of a team member if it’s attached on a website — if it matches another source and the name.
If the team is completely anon or doesn’t have any virtual history easy to find, that’s not mean it’s a scam right away, remember it’s web3 — maybe it should be anon, but the virtual history still counts and could gain some trust points. But above all — count the red flags!
Almost every NFT project is building the community on Discord,
few tips on how to find a red flag there:
– More than 10 000 Discord members, but no real conversation happening (same for 20k, 100k, etc.)
– Only active threads or topics are — giveaways, whitelists, retweets
– Easy to get into the discord (no firewall like rules or phone num. required)
– Check for active members in the chat, not just the member count of the server, bots abound.
How to easily prevent a typical discord scam: Turn off your Discord DMs!
There is no reason any user, channel member, or project dev should reach you via DM.
Possible bad signs in project's community:
– Twitter has 100k+ followers, but you haven’t heard about the project yet
– Marketing manipulation — all the “buzz” and the activity around the project is based on adding retweets, sharing discord invites, shilling projects without context in every place possible — all in exchange for a whitelist spot or free NFT — even worse from another bad project.
– The socials are full of giveaways and like&follow&retweet&share&shit.
What we talk about here are organic growth and natural behavior. The best projects are trying to build the community with virtual meetups, parties, sharing a lot from backstage, sharing the process of the development, and trying to be a group of people — not a bad marketing feed with no care about anything or anyone until you shill their stuff. Scammers usually don’t invest a lot of time to talk to the community, share the project stages, because they don’t care if anybody falls in love with their project or understand what they are trying to achieve — the legit projects do it and as hard as they try, that’s how much trust they get — and they don’t mind talk or explain stuff to 10 or 10K people, because their primary motivation is not a profit.
– Notable and already trustworthy people or projects in the space are following the account (not related to the project)
You can use analytic tools like Sparktoro or Followeraudit, to check the health of the twitter community base, but remember,
– it’s not 100 % accurate
– the percentage of fake followers is not equal to that project bought fake followers, fake accounts could behave like bots or even could be bots.
If it’s bad, it’s probably bad.
– The project is a derivate (looks very similar or same as a popular project)
– The project uses the same or very similar key visual from a popular project (same animal, same thing, same style)
– The name of the project looks like a popular project
– No sneak-peaks from the collection (just promo img, pre-rendered img)
– Bad graphic design — ask your design friend
– Not a real website — most of the content are images
– Bad typography — ask your best in design friend
– Bad art — ask a friend who drinks the most wine
– Bad img export (scams who just copy the images usually copied it badly)
– Website connects a wallet automatically when you land on a website
– Promises on-chain gaming
– Promises utility in the metaverse
– Pushing you to do something
– Passive income promised
– Market manipulation like sweeping the floor by the creators, anything you feel it’s not right or legit, don’t support, you will be rugged soon or later
– If the creators manipulate or actively do something that will harm users to the benefit of the selected ones if there are no real samples from the collection, it may not be bad, but it may turn out like this.
Check project's contract on the Etherscan.
– Project doesn’t release contract before the mint
– The contract is not verified
– Contract discussion — ask your nerd friend