One of the downsides with DeFi yield farming are the high ETH gas fees for each transaction. As Ethereum is still transitioning from 1.0 to 2.0, alternatives such as the BINANCE Smart Chain and the Polygon (MATIC) network have popped up to drastically cut down gas fees. A lot of dapps have popped up over the past few weeks, leading to a substantial increase in transactions.
It sounds nice, right? You don't need to pay ludicrous gas fees while you can take advantage of APYs much higher than those of CeFi wallets like Nexo, Celsius, and Crypto.com. Well, not so fast. It is extremely important that you do your own research. Not all DeFi protocols are created equal and some even turn out to be scams. This seems to be the case with the Polygon DeFi yield farming platform, Polygold Finance.
What Happened with PolyGold Finance?
I first heard about Polygold Finance through a channel called Crypto Wealth on Odysee. His video came out when the yield farming platform was just beginning and the APR rates for stablecoins like USDC and DAI were extremely high.
On top of that, the PolyGold you earn from staking other cryptocurrencies could also be staked for nearly 1500% APR. The earning potential from this protocol was quite impressive, but the first thought that came to my head was "Is this too good to be true?". It turned out that it was.
Around June 9, the lead developer of the platform pulled the rug. DappRadar did a good report on what happened though some information is now outdated. To keep things short, it all began when the developer made this tweet that morning:
Also, the Twitter account no longer exists.
Allegedly, on the Telegram chat group, the developer wrote a message, "It's over". I tried to verify it by joining the group, but the message wasn't there, so perhaps the person deleted it. What I can verify for sure were that people who staked their crypto into the yield farming platform were very angry. Those who did not catch onto the rug pull fast enough could not withdraw their crypto as the website is no longer accessible. In addition, PolyGold's value completely tanked to worthless values. Some on the Telegram group hypothesized the developer sold all of his PolyGold and ran off.
The alleged dump-and-run.
The developer sent a Telegram message apologizing for what happened, though whether his remorse was genuine is debatable. Not only is the message no longer in the chat, but the Alex_PGF account is no longer in the group.
It appeared that he upheld his promise, well for some people. After he posted that message, the polygold.finance website used to had this message:
It looked like the "early depositers", the people who provided initial liquidity, were able to get their funds back. That said, anyone who was not an "early depositer" was not so lucky. In addition, as I mentioned earlier, the Twitter and Telegram accounts no longer exist. As a result, the message above is now completely useless. If you check the polygold.finance now, it tells you to use vfat.tools to recover staked deposits.
Closing Thoughts
Obvious advice is obvious, but always do your own research (DYOR) before staking anything in a yield farming platform. Don't get tempted by the attractively high APY rates and instead, look into the people who are running the platform and access their level of transparency. If at any point you think "This seems too good to be true", keep your crypto safe on your wallet.
In addition, make sure to know how to emergency withdraw in the event the rug does get pulled under you. If you ever intend to deposit into a Polygon yield farm, read this article from RugDocWiki first. Know your MasterChef address and Pool IDs because the window of emergency withdrawing is short.
