On avoiding cryptocurrency scams: Squid Game Token (SQUID)
There are a lot of crypto projects nowadays that people could invest in, but there is no assurance that what these projects promise is legit and genuine; a recent example is the latest rug pull, the Squid Game Token (SQUID).
The importance of DYOR
DYOR, or Do Your Own Research, is a concept that every traded should know and practice. In every investment to a crypto project you make, you must first know the risk that accompanies with it before you put your money in it. You should first make sure that you can trust the project, and your investments must be within the range that you could lose.
The DeFi space is not without risk. Aside from worthwhile projects with useful utility, the DeFi space is also filled with fraudulent ones with only an intention to raise funds then take it away without any trace though there are red flags to look up for.
What is Squid Game (SQUID)? What Happened and Why?
According to CoinMarketCap, SQUID was a meme coin token on the Binance Smart Chain (BSC) and was based on the popular Netflix series. Upon launch, its developers promised that it would eventually have a play-to-earn game inspired by the hit series. It has an initial price of 0.01 USD, which increased exponentially and hit 4.4 USD after three (3) days.
On November 01, 2021, SQUID’s price reached an ATH of a whopping $2861.8, spurred by the “anti-dumping mechanism” of the token. With these numbers, if an investor invested 1,000 USD, their money would have become 286,180,000 USD in just a matter of weeks! And now it’s all gone.
A lot of people are looking for a crypto project that can make them rich in a short period or could provide a 100X ROI, but the truth is, those 100X don’t come along often. People are often enticed by the false promises of getting rich quickly and telling people not to miss out on the once-in-a-lifetime opportunity. However, they forget their due diligence in conducting research if the project is safe or not.
Red Flags along the way
There were red flags that was spotted in the project, some of which were users not being unable to sell their gains after repeated tries, and the Netflix series quickly disproven the association with the cryptocurrency.
Despite these prominent signs, investors kept on buying the token making its token price reach exponential heights before its anonymous developers drained the liquidity pool in a matter of minutes, taking all of the investor’s funds in the process.
This is where the importance of DYOR comes along. One should have researched if the project is not susceptible to any rug pull events, if the project is sustainable, and if the developers have an actual and tangible plan for the future of the token. One must not look only at the potential of a token based on its nature and meager price. One must see to it that the token is just not based on hype.
Why was SQUID not delisted if it was a scam?
The SQUID token was built on the Binance Smart Chain (BSC). It is important to note that blockchains such as BSC and Ethereum are open source, which means Binance or the developers of Ethereum does not have any control over projects built on their networks. Blockchains like BSC are community-driven, and governance-related decisions would need to be coordinated by the community. This is true for all blockchains like Ethereum. That is why there can’t be a way for Binance not to permit DeFi projects from launching that was built from their blockchain.
What is our takeaway from this? SQUID won’t be the first or the last DeFi scam. There could be DeFi projects that can initiate a rug pull any time of the day. This is why DYOR is very important in deciding where to put your money. Make sure that before you invest, you know to yourself that you really looked into the project and trust that it would not turn into something you will regret.