Decentralized Finance (DeFi) is the center of focus for the crypto investor. However, the hype comes with Ponzi DeFi schemes. With many projects coming up in the crypto space, detecting Ponzi DeFi scheme is not very easy for the average crypto enthusiast.
It is important to do a background check and use due diligence to avoid being scammed of your hard earned crypto. Obviously, not all warning signs are easy to detect however, here are some signs that should rings bells before you stake or invest in some DeFi projects.
Low Risks, High returns
It is obvious that a Ponzi scheme will not tell you by working hard you get better returns. Instead, they make it so easy to for you to get high returns to hide the risks involved. This is the catch point and they want more users to onboard so that once they exit the market, they have made good returns.
Consistency in Return on Investments
Ponzi schemes are known for their early stage consistency in returns on investment. They make the deal so good that you cannot resist. They even have occasional bonuses to keep you onboard and stake more. They will keep you engaged; ensure you bring onboard new adopters before they go underground with your “investment”.
Unregistered and Unlicensed Resellers
This is the easiest to detect. Most Ponzi DeFi schemes use the power of numbers to sell their plans to the masses. Their network is composed on resellers who operate through social networking and physical meetings in hotels and resorts. They purport to live a flashy life that anyone envies and that’s how they recruit more victims.
Secrecy and Complexity in Operations
Ponzi scammers are always running away from their imagined enemies and law enforcing agents. They keep shifting their bases at will and do not leave room for tracking. Their systems are operated in secrecy and too complex for the average “investor” to understand.
Receiving Payments comes with Conditions
Once you have put all the hours to recruit your friends, the payments are always accompanied with conditional. Actually, you only know you have been dealing with a Ponzi scheme when your funds are frozen, hard to withdraw or just disappear from the system and you are blocked from accessing them.
You must have noticed I have not singled out any Ponzi DeFi scheme here. It is up to you to do a background check. You do not have to invest what you can afford to lose; do not invest in such projects in the first place.
