In today's edition of YIYL, (You Invest, You Lose), we take some time out to look at scams masquerading as innovation or rather, scams are the cost of so-called innovation, in the form of not so decentralised exchange UniSwap. Given all the hate on centralised exchanges, many are now pushing the narrative that you should be using DEX's instead. 

Centralised exchanges have their issues, for sure, but if you use any tool or service incorrectly, that is you at fault, if you leave your funds with a custodian and you trust them, with an asset you could hold yourself, but you feel it's too much of a pain, then you only have yourself to blame. 

Anyway, back to DEXs, now Uniswap claims to be a DEX, and while its smart contract remains on chain, there is a token, there is a team, and there is a business managing it. UniSwap is a tech company that offers a permissionless exchange of funds, you need not be KYC'd all you need is a wallet, but this doesn't make them decentralised. 

Most people use the Uniswap interface, while a few routes through it via their own front ends. Their automated market making technology and concept is something people find useful, but that doesn't mean the shit that is listed on there is useful, and honestly, it's just been a rug-pull platform. 

## What are crypto rug pulls? 

In shitcoins, a rug pull is a malevolent scheme in which developers abandon a project and flee with investor funds. These rug pull coins love using DEXs because they are so easy to list your unregulated security. 

Then all you need to do is get suckers to provide liquidity because you're selling them fake yield or some stupid shit like that. Since Uniswap set the pricing of tokens in a pool algorithmically based on the available balances once the scammer attracts enough liquidity to the pool, they can cut and run. 

Rug pulls can occur immediately after the introduction of a project, or they may play out over a longer length of time, prolonging the investors’ pain. The easiest is obviously just to drain the pool by dumping the token you have an infinite supply of and rip those LPs' faces off. 

The sad thing is those LPs probably had to buy your shitcoin too, to pool it, so you rip them off twice lol.

![uniswap.png](https://images.hive.blog/DQmV5wZsUmECTJtd8996NbK6rGpHQt7ftK11ZdeffoSR5z7/uniswap.png)

## Uniswap begets a bad reputation

Uniswap has become a pretty familiar name among the shitcoin exchanges.  I remember when it first launched to big hype on how it was going to democratize trading and yes it does huge volumes, but most people still prefer to hand their money over to centralised scammers like SBF. 

Maybe Uniswap should advertise on the Superbowl lol. 

Now that the rekking has started the idyllic story behind this exchange is starting to change for the better. The narrative is now based on its track record which is completely tainted by the most recent rug pull report. 

Per the findings of this report, it states that 97.7% of tokens launched on Uniswap were rug pulls.

The report provides an extensive labeled dataset of Uniswap rug pulls to date, including the source code, the liquidity, the prices, the mint/burn, and transfer events. 

The dataset includes all tokens from 04/05/2020 to 03/09/2021. In total, they labeled 26 957 tokens as scams/rug pulls and 631 tokens as non-malicious.

Now shitcoiners will say oh but what about the 631 coins that haven't rug pulled yet, this is the shitcoin Stockholm syndrome talking and survivorship bias. Every shitcoiner tries to ride their luck to long and eventually gets creamed. 

Most shitcoiners are underwater right now, but they're looking at their entry points without adjusting for inflation and time decay/dilution of their shitcoin, so they don't know they've been had been taken just in a round about rug pull. 

## Catalan researchers

Uniswap has been around since November 2018 and hosts a platform for trading More than 40,000 ERC-20 tokens which are locked and tradable in the Uniswap system, with a total value of USD 7 billion. 

Following the extensive study, the final list contains 27,588 tagged tokens, of which 631 are non-malicious, and 26,957 are malicious. 

Within the malicious, there are 24,870 rapid rug pulls and 2,087 events without LP Burn. The report reveals that there are far fewer benign tokens than harmful ones.

## It's all one big rug pull

Shitcoin traders feel they can play the odds, that there is safety in numbers, they all think they're Lionel Messi in his prime and can dance around sliding tackles and walk the ball into the box and score, but most of them have the footwork of a baby giraffe. 

So here's my advice to you, keep LP'ing scam tokens, keep farming fees that earn you less than the time decay of the token. Keep being exit liquidity for scams. Keep trading tokens hoping you'll strike it lucky.

The reversion to the mean will get you if you play long enough and the mean is 0.

**Sources:**

- [msn.com](https://www.msn.com/en-us/money/markets/report-977-of-tokens-launched-on-uniswap-are-rug-pulls/ar-AA13Atjm)

## Have your say

What do you good people of HIVE think? 

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

## Let's connect

If you liked this post, sprinkle it with an upvote or esteem and if you don't already, consider following me @chekohler  and subscribe to my [fanbase](https://hive.vote/dash.php?i=2&fan=chekohler)


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