- A recent report shows that the output of pump and dump features among DEX ERC-20 tokens developed on the Ethereum platform increased by 53.6%.
- The results of the Chainalis report show that institutions made about $241.6 in profit from trading these tokens during 2023.
- Individuals affected by pump and dump schemes experience a significant decline in the value of their assets.
According to the firm's criteria, the research revealed that about 53.6% of ERC-20 tokens on decentralized exchanges (DEXes) indicate potential "pump and dump" activities.
ERC-20 tokens on the Ethereum platform meet the criteria for "pump and dump" strategies. This type of scheme involves artificially inflating (pumping) the price of an asset by an entity or collective, followed by the deliberate sale (dumping) of their holdings for a substantial profit. The goal is to create excitement around the token, encouraging increased trading volume by market participants. However, when prices peak, these institutions unload their holdings, causing substantial losses to many traders.
Chainalysis used on-chain data and established the identity of these tokens through complex criteria. This includes checking whether a DEX user has purchased a token at least five times with enough wallet holders without an on-chain connection, checking whether an address has received 70% of tokens from DEX's liquidity pool. has withdrawn more than a percentage of liquidity, and checking whether the token currently maintains a liquidity level of $300 or less.
Tokens marked as potential scams represent a mere 1.3% of the entire DEX trading volume on the Ethereum network. By meeting the aforementioned criteria, the entities that launched these tokens earned a total profit of $241.6 million in 2023 from the sale of these tokens.
This information is of value to market participants, especially given the growing prevalence of memecoins on the Solana blockchain.
Tags:
Crypto Currency
