Fake crypto liquidity pools: How to spot and avoid them
Discover the risks of fake crypto liquidity pools, common scam tactics and practical strategies to identify and steer clear of fraudulent projects.
Crypto liquidity pools, which facilitate decentralized trading and other financial operations in decentralized finance (DeFi), are collections of cryptocurrency funds secured by smart contracts.
They enable users to trade directly against the pool’s liquidity, thus eliminating the need for traditional order books. Funds in the liquidity pools are supplied by participants known as liquidity providers (LPs). For contributing their assets, LPs earn rewards, usually in the form of governance tokens or transaction fees.
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Author: James Smith
