Study Flags Over Half of New Ethereum Tokens as Potential Pump and Dumps, But Volume Remains Low
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Over half of new Ethereum tokens on decentralized exchanges show signs of being potential pump and dump schemes.
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These possible scam tokens account for just 1.3% of total trading volume on decentralized exchanges.
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Chainalysis identified 3 on-chain criteria to detect pump and dump behavior outside purchases, single address removing majority of liquidity, token left largely inactive.
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Wash trading is a major red flag of manipulation, with buyers and sellers usually being one or two addresses.
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Blockchain transparency allows pump and dumps to be identified, a message for policymakers considering regulation.