In recent months, I’ve spent nearly all my time researching areas where money flows heavily—particularly in SOL and AVAX chains. Along with the rise of money flows, scams are becoming increasingly prevalent. Having experienced my fair share of being scammed and learning from it, I’ve compiled key ways to identify scams, especially as they ramp up during market FOMO. I’ve also added a few tips for navigating trends during this time.

Scammers—individuals or groups who steal others’ assets—thrive in crypto, especially when market FOMO is at its peak. Here’s a breakdown of the most common scams in DEX, CEX, and private pools, along with some bonus tips for staying ahead of the game.

1. Common Scams in DEX, CEX, and Private Pools

The following are some of the most frequent scam types you’ll encounter, especially on decentralized exchanges (DEX) and private pools.

Slow Rug Pulls

One of the most common scams on DEXs is the slow rug pull. Each day, countless low-quality projects are launched with the sole intention of stealing players' money. Scammers create detailed, professional-looking projects to attract larger investments. Here's how slow rug pulls typically play out:

• Lock Sell: Scammers launch a meme or shitcoin project and add malicious code that allows people to buy the token but prevents them from selling. When the price rises, investors can't sell, while the developer (DEV) is the only one who can withdraw liquidity (LQ).
• Liquidity Removal: In another version, tokens can be bought and sold normally. However, once the liquidity pool grows large enough, the DEV removes all liquidity, causing a massive price drop. Only the scammer profits.

This scam is particularly common on chains like SOL, AVAX, and others like Dogechain or SUI.

Example:

On AVAX, the COQWIF meme coin pumped hard, following the success of COQ, and I personally secured a 12x return before it rug-pulled. Fortunately, I caught another scam on time, saving my capital.

Liquidity Theft

This slow rug pull is prevalent among DEX traders. It involves scammers attaching their token to a high-quality token (like ETH or BNB) to form a liquidity pool. As the scam token’s price rises, investors pour in, only for the scammer to remove the valuable asset (e.g., ETH) from the pool, leaving worthless tokens behind.

DEV Fund Theft

Some scams take the form of legitimate-looking fundraising projects. Developers (DEV) raise funds with the promise of launching a token, but after securing the investment, they either run off with the funds or launch a worthless token with no liquidity. A notorious example is the Mojito project in the APT ecosystem, where millions of dollars were raised, yet only a fraction of the liquidity promised was delivered.

Big Project Scams

Even large, well-known projects can pull off sophisticated scams. In these cases, marketing is done professionally to generate FOMO, but as the price soars, developers secretly sell off their tokens. Prices crash, leaving investors holding the bag while the developers walk away with profits. Some even orchestrate fake hacks to explain sudden drops in value.

2. Tips for Avoiding Crypto Scams

Avoiding scams in crypto requires vigilance and due diligence. Here are some tips to protect yourself:

1. Check Contracts for Malicious Code

Before investing in any new token, check the contract for hidden or harmful code. Tools like Etherscan or BscScan can help you identify red flags, such as locked selling functions or high transaction fees.

2. Research the Development Team (DYOR)

Always investigate the team behind the project. Look for their previous projects, verify their identities, and check whether they have a history of rug-pulls or failed ventures.

3. Be Wary of Apps and Fake Admins

Scammers often pose as project admins, offering fake opportunities or ambassador roles. Avoid downloading unverified apps, and never click on suspicious links in Telegram or Discord. A common tactic is to lure victims into downloading malicious files that steal their seed phrases or account information.

4. Monitor DEV Wallets

Tracking the wallet addresses of DEV teams can provide valuable insight. I once discovered that the DEV for KIMBO was also involved with COQ, leading me to secure a 3x profit before the project rug-pulled.

3. Playing the Trend: Tips for Profiting Safely

Navigating crypto trends can be highly profitable, but it requires strategy and caution. Here are a few tips for playing the trend while minimizing risk:

1. Use Bots to Stay Ahead

DEX trading without a bot is like running a race without shoes—you’re at a disadvantage. Using a bot on SOL or other chains can help you automate trades and take advantage of small price movements or referral rewards.

2. Follow the Right People

Follow Gem hunters, KOLs, and DEVs on platforms like Twitter to stay ahead of emerging trends. If you see that the wallet activity of certain developers is increasing on a project, it might be worth investigating further.

3. Scale Volumes Based on Market Cap

Adjust your position size based on the market cap of the project. For example, for projects with a cap under $10M, start with a smaller allocation (e.g., 2 AVAX), and increase your investment as the project grows. Higher caps require bigger volume for smaller, more stable returns.

4. Take Profits Based on Key Milestones

Use market cap milestones to take profits. Once a project hits $1M in cap, consider taking partial profits, and repeat at $2M, $10M, and $50M. This approach ensures you lock in gains while maintaining exposure to further growth.

Conclusion: Protecting Yourself and Thriving in Crypto

Scammers will always exist in crypto, especially in DEXs and private pools. Whether it’s a slow rug pull or liquidity theft, it’s important to stay informed and use tools like contract checking and wallet monitoring to identify red flags early.

In addition, taking a strategic approach to playing market trends—whether by using bots, tracking DEV activity, or scaling investments based on market cap—will increase your chances of success while minimizing the risk of falling victim to scams.

Ultimately, scams won’t disappear, but with the right knowledge and tools, you can reduce your exposure to them and make the most of the opportunities in the crypto market.

Source: DEX Trading Insights