The crypto world is throwing rotten tomatoes at HotdogSwap, a decentralized finance (DeFi) meme project that experienced a pump-and-dump for its Hotdog token from over $6,200 to $0, all within its launch date.
HotdogSwap.org, launched on September 2, claims to provide investors with more than 1 million percent annual percentage yield (APY). Investors were quick to jump in — and out of — the meme project for a quick buck.
Reminiscent of BitConnect Days?
At the time of writing, one Hotdog token is worth $0.18, according to Uniswap.info. As such, the DeFi token has, as the original crypto OGs say, gone “to the moon” and back.
While many Twitterians had a laugh on top of gaining a lot of money within minutes, with some reminiscing the epic BitConnect days, this provides a grave problem not just for the rising DeFi community, but for the entire crypto world.
Despite Uniswap outperforming crypto exchanges that have been in business for years, it is still being plagued by unwelcome DeFi projects. Interestingly enough, some of these meme projects have their names derived from food, including Yam, Sushi, and Pizza.
DeFi Problems Becoming Evident
Uniswap has been warning people of fraudsters that list scammy tokens on its platform, taking advantage of the DeFi fever. But this downside is inevitable, as its goal is to become a decentralized protocol for “automated liquidity provision on Ethereum”. Hence, it cannot prevent scammers from listing their shady tokens on its platform because anyone can create tokens on Ethereum, and that it is decentralized to begin with.
Ethereum godfather Vitalik Buterin warned his followers early on regarding DeFi, saying that he would “cringe” whenever he would read that this new hype will allow people to “take out loans with no paperwork”.
I know I’m in the minority on this issue, but every time I see an article like https://t.co/2i7ywE7GqJ saying defi gives you the ability to “take out loans with no paperwork” I still cringe… pic.twitter.com/irIW8j3eAe
— vitalik.eth (@VitalikButerin) January 30, 2020
Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached.
— vitalik.eth (@VitalikButerin) June 20, 2020
Others are also calling the current market reminiscent of the 2017 crypto bull run, wherein Bitcoin reached its all-time high of $20,000 per piece — a feat it has yet to repeat.
We know, of course, how the bull run ended.
The DeFi hype may continue to attract more investors given that traditional financial markets continue to look gloomy, hence the FOMO. But along with the investors will inadvertently come fraudsters. Instances like these may turn the FOMO into FUD.