NAIROBI (Coinchapter.com) – The rapid rise of Base Blockchain memecoins has sparked concerns over the prevalence of scams and vulnerabilities within this burgeoning ecosystem. As users flock to the platform in search of the next big crypto jackpot, a worrying trend has emerged. New data reveals that a significant portion of these tokens pose serious risks to investors.

Base blockchain common vulnerabilities. Source: Cointelegraph

Cointelegraph Magazine’s analysis revealed that 90.8% of 1,000 new Base Blockchain memecoins failed to implement at least one of three critical security measures. These include locked liquidity, verified contracts, and the absence of honeypots. These vulnerabilities expose unsuspecting users to rug pulls. Developers can abscond with funds and honeypots prevent owners from selling their tokens.

Security Concerns Abound

The Dencun upgrade stands as a pivotal moment for Ethereum’s layer two ecosystems. It brings down the cost of transactions and makes it more accessible for users to engage in the DeFi space. As a result, Base, an Ethereum layer-2 blockchain crafted by Coinbase, has seen a staggering increase in its total value locked (TVL), breaching the $4 billion mark. Much of this activity has been driven by the proliferation of memecoins as investors seek to strike it rich with a small initial outlay.

Base TVL chart. Source: L2BEAT

The implications are dire, not just for the financial well-being of investors but also for the credibility of the Base blockchain ecosystem. According to David Schwed of Halborn, the proliferation of vulnerabilities often results from creators’ ignorance or negligence. This is particularly the cases when tokens are created more for amusement or to challenge the status quo.

The data suggests that 17% of tokens on Base are outright crypto scams, a figure that cannot be overlooked. With 121 projects identified as potential honeypots and an additional 48 imposing sales taxes as excessive as 100%, the risk of falling victim to these schemes is not trivial. The menace extends beyond mere technical failings, embodying a deliberate ploy to defraud investors.

The Memecoin Mayhem on Base Blockchain

The surge in Base Blockchain memecoin activity has not gone unnoticed, with the platform’s total value locked (TVL) and transaction volumes soaring. In the week leading up to April 2, the number of new tokens launched on Base exploded to 4,000. This is a significant increase from the 1,300 seen just a week earlier.

Moreover, this memecoin frenzy has had a tangible impact on the broader decentralized finance (DeFi) landscape. While Solana, another fast and low-cost blockchain, has maintained a steady 19,000 new projects per week, the trading volumes on its decentralized exchanges (DEXs) have declined by as much as 59.5%. Conversely, four of the top five Base DEXs have experienced positive changes in trading volume. Uniswap leads the charge with a 147% rise to $405.09 million.

Top base blockchain memecoins. Source: CoinGenko

Notably, the Base Blockchain memecoins leading the charge include Brett (BRETT), Degen (Base) (DEGEN), and Toshi (TOSHI). These tokens have seen significant price movements in the past week, with BRETT gaining 14.1%, DEGEN losing 9.9%, and TOSHI surging 54.2%. However, as the broader analysis has revealed, the high trading volumes and market capitalizations of these memecoins do not necessarily indicate their legitimacy or security.

Above all, the Base Blockchain memecoin phenomenon highlights challenges for platforms seeking mainstream adoption. Certainly, while new users and capital are positive, scams and security risks remain prevalent. As the industry evolves, Base must balance innovation with strong consumer protections. Only then can decentralized finance reach its full potential.

The post Are Base Blockchain Memecoins Really Scams? appeared first on CoinChapter.

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Filed under: Bitcoin - @ April 9, 2024 7:27 pm