- 1.Rug Pull
Rug Pull is an analogy like we stand on a rug and then was pulled out causing him to fall unexpectedly. The owner himself took all the coins on the platform by writing a smart contract to create a loophole in the Rug Pull in the first place.
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- 2. Exit Scam
Exit Scam is where the owner leaves the project or no further development due to many reasons such as unfixed problems. The recent incident happened to Merlin, the announcement to end the development resulted in DeFi’s governance token dropping quickly, and the Exit Scam may also include a Rug Pull in some other cases.
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- 3. Hack
Being hacked is a non-intentional act of the owner. But someone outside can hack the smart contract code to fix something, since all source code on DeFi must be public. If the code written contains bugs or a small loophole it can be hacked. For example, the Icecream platform was hacked by a hacker to change the ownership to himself and mint more coins before selling and collecting other coins in this case.
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- 4. Decrease in value
Another big issue many overlook because they pay attention to APR and APY. The token can have a decrease in their value. Especially when it comes to pairs with high APR, such as governance token, there is a high probability of falling.
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- 5. Impermanent Loss
Farming users will eventually face impermanent loss or profit loss when there’s an involvement of coin pairs. For example SIX-BNB the deposit value was $1000 by holding individually one might gain whole profiting when the coin goes up. By farming in a pair it might lose its values due to AMM calculation creating divergence between price of the asset within the liquidity pool.
6. Hacked Wallet or Seed Phrase
The important part which requires high responsibility of the users to keep in mind and keep it securely is the decentralized wallet such as MetaMask, Safepal, Kaikas, or D’cent and more.
Usually people are hacked from the phishing action of a seed phrase or being hacked on a computer due to saving a file for their seed phrase.
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- 7. Phishing Scam
This pattern is an alternative for hacking by deceiving the victim into being trapped such as opening a source to fake MetaMask browser. Pretending to giving out a link claiming user will receive a special price, but losing all the assets from the wallet.
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- 8. Wrong Transaction
This classix human error causing a huge amount of loss by transferring to the wrong final address such as to the wrong person or to the token address, burning it without any way to retrieve.