A recent study was conducted on Uniswap by Bruno Mazorra, Victor Adan, and Vanesa Daza. It was titled "Do Not Rug On Me: Zero-Dimensional Scam Detection ."
The study pointed out that the simplicity and lack of regulation in Uniswap make it porous. This has made it easy for scammers to list and issue non-valuable tokens on the platform.
The main scam method deployed on Uniswap is rug pull. Developers will launch a token, sugarcoat the roadmap with a promising future, gather investors' funds, and disappear. Rug pull accounted for about $2 billion loss in the blockchain ecosystem in 2020.
According to the study, 97.7% of tokens launched on Uniswap turned out to be rug pulls. The study showed that researchers added transaction data from 27,588 tokens. After analyzing these tokens, only 631 were found to be genuine.
The researchers deployed a machine-learning method with a high detection capacity. This method can detect potential rug pulls before they occur and has about 99% accuracy.
In a total of 27,588 tokens analyzed, 24,870 were fast rug pulls, while 2,087 were LP Burns.
Dr. Nick tweeted, "According to this research, 97.7% of tokens launched on Uniswap were rug pulls." The tweet has since generated controversies and mixed reactions. Several Twitter users claimed it lacks substantial ground to make such a submission.
The version of the study published and circulated by MDPI that has since gone viral is longer than the first draft. This version expanded the data set and included tokens listed on Uniswap V2 through September 3, 2021. Even though the research was published in March 2022, Dr. Nick just shared it on Twitter.
Some industry experts bear their mind on the findings of the research.
Mark Zeller, the Vice president of the DeFi committee at L'Adan, faulted the regulators. He noted that they shouldn't have lowered the minimum capital for limited liability company registration to €1.
On the other hand, Maya Zehavi, an Israeli Blockchain industry forum board member, flawed the research methodology. She said the study did not consider token liquidity or volume— to determine which 27,588 tokens had experienced a rug pull.
The study has been finalized since January 2022 and was released in March. It, however, went viral due to Nick's tweet.
Experts agreed that several tokens listed on Uniswap were full of scams. However, not all the 97.7% were rug pulls; some had low revenue phishing scams.
It is, therefore, important for a decentralized crypto exchange like Uniswap to increase its requirement. This would ensure scammers cannot list their "paper-weight" tokens and prevent scams.
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