5 ways to avoid getting scammed in web3
Web3 is a new world filled with tons of exciting opportunities and tons of not-so-exciting scams. Billions of dollars have been lost in web3 scams and it doesn’t seem to be slowing down.
The two main types of web3 scams are Wallet scams and Rug pulls, sure there are other types of scams in web3 but these are the most common and can be somewhat avoided.
Wallet scams are scams that happen based on a wallet compromise, it could be either connecting your wallet to a malicious contract or giving your secret phrase out.
NEVER GIVE ANYONE YOUR SECRET PHRASE
A common wallet scam is a scam normally done by spambots, where you are asked to fill a form with your secret phrase so a problem can be resolved for you. In web3 no one should know your secret phrase.
Another common wallet scam is the wallet connect scam. This scam is done by leading someone to a site and the person connects his/her wallet to the site, thereby giving the contract the ability to take your funds.
A common way this happens is when a scammer creates a replica of a popular web3 site and then just changes a character or two in the site link. For example, Openseea.com, take note of the double e. It can be hard to notice these subtle disparities but making a habit of confirming the links is always a good thing.
This is your typical crypto token scam, also called pump and dumps, where a team or influencer creates artificial hype around a token, drives the price up, and sells all his tokens to tank the price.
This is a common one as it’s mostly done by influencers you’re supposed to ‘trust’.
There is also typical rug pulls where a creator makes an NFT project, markets it well and after it sells out, he or she deletes all the social media channels and stops working on it.
Okay, now how to avoid getting scammed in web3?
1. Confirm the link of the site you are on
Scammers create exact replicas of popular web3 sites and change the link, for example, openseea.com note the double e.
2. Never share your secret phrase
Essentially, your secret phrase is your web3 key. Avoid sharing your secret phrase, especially not in forms.
A common scam is a bot scam where you’re told to submit your secret phrase so a problem can be fixed for you. A generally good rule of thumb is ‘ Never submit your secret phrase in forms.
3. Be wary of projects that promise outsized crazy returns
3,000% APY, Crazy farming rewards, etc. are a MASSIVE red flag in web3, in general actually. New projects come up promising to 100x your money in a year just by ‘investing’ in their token or protocol or yield farm. Avoid projects like that at all cost.
A rule of thumb here is ‘if its too good to be true, it probably is’.
4. Avoid Influencer run projects
Yes not all influencer run projects are a scam, Gary vee has an NFT project, and it’s going great but that’s a rare one, Most influencer projects end up being a massive rug pull and the influencers leave their followers hanging.
It is hard to pick the influencer project that won’t be a scam as inevitably some won’t but staying far away from influencer run projects is a sure-fire way of not getting the rug pulled.
5. Don’t invest in projects where the founders are anonymous
Admittedly, some anonymous founders have created a fantastic project but again staying clear of that space is a good way to not be scammed easily as most anonymous run projects end up being a rug pull.
If the founder is anonymous but has a long believable reputation in the space it’s probably worth it to be part of it (NFA) but a generally good rule of thumb is ‘if reputation is not at stake, stay clear of it’.
So there you have it these 5 ways to avoid getting scammed in web3.