This not-so-decentralized platform has attracted a wide array of users, particularly for its low-cost transaction environment. However, this burgeoning growth has not come without its pitfalls.
A recent Cointelegraph report highlights concerning security and legitimacy issues with new Base meme coins.
Security Flaws in Base’s New Tokens
The investigation examined 1,000 new Base tokens, mainly meme coins or scams, launched in the week of March 19 to 25. These tokens underwent automated DEXTools audits focusing on three key security measures: locked liquidity, verified contracts, and the absence of honeypots. The findings were alarming, to say the least.
According to the analysis, a staggering 91% (908 projects) of the sampled tokens failed to meet at least one of the crucial security criteria. This vast majority of tokens with security vulnerabilities pose a significant risk of financial losses to users. The lack of security measures like locked liquidity verified contracts, and honeypot prevention exposes users to financial fraud. This includes the risk of rug pulls.
Rug pulls have become a notorious scam in the cryptocurrency space, with developers abruptly removing liquidity from a project. This renders the token worthless and leaves investors with significant losses. The report’s findings that 905 projects (90.5% of the sampled tokens) did not lock their liquidity underscores the prevalent risk of such scams on the Base platform.
More About Base’s Meme Coins
Even more concerning is the revelation that almost one in six (approximately 17%) of the tokens analyzed are outright scams. These malicious projects employ a variety of deceptive tactics designed explicitly to steal user funds. This stark statistic highlights a troubling aspect of the Base ecosystem. The allure of quick gains through meme coins is exploited by fraudsters to prey on unsuspecting investors. Here is one example:
Someone just scammed $500,000 with a meme coin on Base.
I feel sorry for those who fell for the $SIT scam on Base.
🧵 pic.twitter.com/hN3NYmp89T
— Antoine Rousseaux (@AntoineRSX) April 2, 2024
The surge in user numbers, transactions, and TVL on Base after the Dencun upgrade clearly shows the platform’s potential. It demonstrates Base’s ability to provide a more accessible and efficient layer 2 solution on Ethereum. However, the findings from Cointelegraph’s investigation serve as a stark reminder of the dark side of this growth.
The proliferation of meme coins with security vulnerabilities and the presence of deliberate scams on the platform highlights the urgent need for more stringent security measures and vetting processes. Read the whole research here.
Disclaimer
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