It's important to note that Uniswap is decentralized and anyone can "list" anything for trading without asking anyone or going through any process. This means there are thousands of tokens, probably millions in the future, available to trade.
Users do not see these tokens unless they actively search them out. Uniswap uses the TokenList standard (https://tokenlists.org/) and by default users only see tokens such as the top 100 projects on CoinGecko. There are many lists created by reputable players such as Aave and Gemini which cover the entire gamut of projects users want to trade without exposing end users to scam tokens.
I believe this is a good system and has worked well as having any kind of listing process or even a DAO introduces subjectivity and provides points of capture for bad actors. With an open listing process and standards like TokenLists we can say that Uniswap is truly a public good and will be around as long as we need it which provides a guaranteed way to swap any asset for any other asset no matter who created it or how controversial it is which is a good primitive for humanity to be able to rely on.
>There are many lists created by reputable players such as Aave and Gemini which cover the entire gamut of projects users want to trade without exposing end users to scam tokens.
Reputable how? like ftx a couple weeks ago? Gemini holds an F rating by the BBB and a massive amount of complaints on trust pilot.[1][2]
This is their marketing message "Put your crypto to work. With Gemini Earn, you can receive up to 8.05% APY on your cryptocurrency." This is done by buying and holding stablecoins. Just curious how do you suppose they return such high APY on stablecoins without doing the exact same scam as FTX?
Not sure what gemini has to do with this, but most people who actually think crypto is interesting will tell you that _any_ centralized exchange (to include coinbase, gemini, the NYSE, even the ones in the future that haven’t been made yet) is against the ethos of crypto. Uniswap is an entirely different class of thing.
The only scams possible in the _logic_ of Uniswap are those which would be considered bugs in the code.
Obviously, as this article points out — that’s not a panacea for _all_ scams. But I am surprised that people on a forum about hacking can’t see why eliminating an entire class of bugs could be useful.
"Not your keys, not your coins" has been repeated ad nauseum on crypto forums for years. It is very much part of the ethos and received wisdom, even if often discarded.
To say that centralized exchanges whom you trust to keep your assets in their custody run counter to the spirit of a system conceived with trustlessness as the defining feature is not rhetorical voodoo or fallacious reasoning.
Is saying “most of something” a universal generalisation?
The comment didn’t say “you’re not a crypto enthusiast _unless_ you believe X”. It just made an assertion (which, for what it’s worth, I think is incorrect) that the majority have a certain belief.
You’re both completely missing the point (hence, my somewhat terse original reply).
It really doesn’t matter to the meaning of my comment whether the first sentence exists or not. You can simply remove it if you like, the rest of the comment is still comprehensible. And, most importantly, its main point - to differentiate between the kind of exchange the gp was referencing and the kind the post is about, still stands.
This is all just a case of nitpicking some small detail that is so common and annoying. It’s the “your battery is dying” to a screenshot.
Even disregarding that, are we really posting wikipedia links to No True Scotsman in 2022? Has anyone not heard of NTS? It just comes across as pedantic.
Finally, you’re all hung up on the definition of “crypto enthusiast” — but it doesn’t even have meaning in the specific context. It’s just an attempt to shorten a much longer comment (like this one).
In my head, crypto enthusiast was just the 15 character version of “that group of people who are very interested in the programming and theory of decentralized economies. They tend to attend crypto conferences, program solidity or other smart contract dsls, and use phrases like ‘not your keys, not your crypto’”.
In that context the statement was mostly tautological stage setting for the rest of the comment, so for the whole thing to get derailed by low effort, kind of rude, attempts “but it’s an almost, but not quite logical fallacy (well, NTS isn’t actually a logical fallacy, but I am going to snarkily imply it is one)” sniping is not only wasted space … it’s boring.
It's just neutral infrastructure. Trying to think of an analogy, I thought... "It would be like saying 98% of transactions in $USD are scams, that wouldn't mean $USD are unsafe to use."
But once i said that in my head... it would definitely say something about a traditional currency if 98% of transactions were scams. (I know uniswap isn't a currency, that just came out of my attempt at an analogy). Something not good. About something. Maybe it doesn't mean uniswap is unsafe to use, but wow, it means something is a mess.
If it just means that there are a crazy ton of people trying scams with tokens, that sure seems like something to be aware of.
It's important to note that this paper is discussing listings and not transactions/volume. Almost no one used or bought these tokens and 99% of Uniswap's volume is normal safe things like ETH, DAI, etc.
If 98% of Uniswap trades were scams then I definitely wouldn't be here discussing it.
No, because the number of tokens doesn't matter, the trade volume does. It's not the case that 98% of trade volume/value is scams.
The same applies to your USD analogy. It doesn't matter if 98% of transactions are scams if these 98% are worth a few dollars only. A scammer could make a million transaction worth a cent each. That's very different from a trillion dollars being used in a few big scam transactions.
"which provides a guaranteed way to swap any asset for any other asset no matter who created it or how controversial it is which is a good primitive for humanity to be able to rely on."
The OP title is misleading because the relevant number to think about with regards to scams on Uniswap is the percentage of value traded, not the percentage of tokens launched.
People can and do spam Uniswap with fake tokens, because it is wide open and anyone can interact with it. That doesn't necessarily mean that large amounts are being lost trading these scam tokens. I don't know the numbers myself, but if 99% percent of Uniswap trades are WBTC, ETH, LINK, USDC, DAI, and other big-name tokens, and 1% are scams, then the scale of the problem is not at all what is implied by the headline.
If someone is serious about measuring fraud on UniSwap, they would look into the percentage of value traded accounted for by these scam tokens.
This question matters from a policy perspective because headlines like this disparage one of the best things to emerge from crypto in recent years (DeFi) and deflect criticism away from where it is deserved (centralization).
DeFi apps like Uniswap are safer than centralized exchanges because you can see everything that is happening on-chain, and maintain custody of your own tokens yourself. Most people who were relying of FTX have been screwed by the exchange itself, regardless of the market value of the token that they thought they owned. If you lose money on Uniswap it's not because the exchange did something wrong, but because the issuer of the token did something wrong, or simply because the token you purchased fell in value.
If you are trading ETH, WBTC, LINK, USDC on Uniswap, you are better protected than if you are trading these same tokens on any of the centralized exchanges.
Why would I dispute it? At best the title is misleading though as most readers likely aren't aware of how Uniswap works and will think "97% of the tokens are scams so Uniswap is unsafe to use" which isn't true in the slightest.
This misconception is exactly why I made my comment. If you go to Uniswap right now you won't have access to any of these tokens. You are just about as safe as using Charles Schwab.
Uniswap is open source, and if you use it as an exchange, it doesn't even hold your funds. I'd argue that since your funds are not there, then your funds are safer than with a custodian and insurance. Lehman was also insured, wasn't it?
Yeah? You can't pick apples from an orange tree either. What do shares of a company/futures/fund have to do with this market in particular?
Its a digital marketplace. The digital space is full of attempted scams that never come to fruition, and their presence is no indication of engagement. Is that really that hard to wrap your head around?
there are over 12,000 OTC stock tickers, these are mostly scams. I know Schwab allows OTC trading. The NYSE+Nasdaq combined also have around 12,000 tickers. So 50% of the things available on Schwab are scams.
I agree. This is the problem that Google has. A big chunk of the websites are seo spam, fake support scams, and other nasty or untuneful sites. And Google has to find the few useful ones. Some people ask to not use pagerank[1] and just show all the results in random order, but in that case you would get a irrelevant list.
Maybe not these days with the popularity of index funds, but it wasn't that long ago that places like Charles Schwab would push actively managed funds that would enrich fund managers while underperforming the market, and then they would close those funds and start new ones. Not quite a rug pull, as you'd keep the remainder of your money, but not great!
How is it misleading it's an accurate statement of the findings of an analysis. Your argument is they won't see those tokens cause they're gonna search out the one they like (and that one won't be a scam?)
What they'll conclude reading this is "wow, crypto is full of scams" and be right.
It's accurate in the sense that "97% of email is scams and phishing" which is a neat fact but doesn't indict email as a failure.
Email and Uniswap are both useful tools that are safe to use for even non-technical users. In fact Uniswap is safer as spam filters aren't 100% reliable but Uniswap's lists nearly are.
My conclusion reading it was, crypto tokens are 98% scams. Uniswap is an exchange. It's a utility, using an open protocol. It's makeup reflects the makeup of the domain.
If you go to Uniswap right now you won't see any of these tokens. You run no risk of getting scammed by using Uniswap unless you go out of your way and manually add them.
Looking at the paper abstract, it says the identified scams by looking at transactions. So it seems at least some people are manually adding them and getting scammed. Or are you saying anyone who does that is by definition using Uniswap wrong and shouldn’t be counted as being scammed on Uniswap?
If you are a scammer, you would typically do wash trading (or hire someone to do wash trading) for your own token to make it look like there is legitimate activity. Just because these tokens have been swapped doesn't mean this was done by retail. The vast majority of these tokens are probably "failed scams" where the scammers tried but failed to generate traction.
Remember that you can be aware of something being a scam but still trade it, since you believe that the thing won’t collapse just yet. A very risky behavior of course, but it doesn’t mean that you have been scammed yourself.
They are not using it wrong the same way someone being scammed by Nigerian prince spam are not using email wrong.
Uniswap filters the tokens available the same modern email providers filters email. If you go looking in the spam folder and fall pray to a scam there, it is your fault, not the fault of the email provider.
The paper does not analyze the transactions directly unless I'm missing that piece. There are a number of reasons accounts would interact with the scam tokens such as the scamming group filling up the liquidity pool, creating fake volume to add legitimacy, and other steps to complete the scam.
There's also the obvious case of the scammers getting a user to actually buy the token (perhaps through spam email or "pump groups" that give explicit instructions on how to perform the swap) which I'm not saying has never happened but I do claim is more rare. Even the obviously silly scam emails do have the occasional person click on them and lose their money. The upside is that getting scammed on Uniswap is actually harder as you need to manually bypass safety features.
No. Uniswap will display the Uniswap Labs default list from Token Lists[0], which covers a lot of the legitmate tokens. Token Lists has additional lists from other protocols if you want to expand the listings. Unless a token is playing a long con (FTT I guess) it’s unlikely to be listed in these.
If you want to trade an unlisted token by adding the contract address manually, sure you can do that. But then it’s on you if you get scammed, like if you follow through on a solicitation from a spam email.
Misconceptions like yours are why the title is misleading. If you go to Uniswap right now you will not see any of these tokens and have a near 0% chance of being scammed.
> If you go to Uniswap right now you will not see any of these tokens and have a near 0% chance of being scammed
If there's 100 tokens listed on the front page, and one of them is a scam, that may be near 0%, but it's equally near to 2%.
I'd be pretty confident that there's a >1% chance of being scammed on a platform like this. FTT wasn't thought to be a scam until it was proven to be.
Unless a token issuer does so with fully audited accounting with real assets backing their tokens, why should any token not be default assumed to be a scam, instead of default assumed to be valid?
Popularity and usage doesn't change this point. USDT may be incredibly popular, but it also lacks credibility.
Ignoring anything else you might have gotten wrong, the comment you are responding to didn't say a 2.3% chance of being scammed, it said a 2.3% chance of NOT being scammed, which is nowhere near 0% or 2%, as it comes from abusing the 97.7% figure from the paper.
As amused as I am to be roasted by the great cydia himself, ignoring all the other things I got wrong, I wasn’t actually responding to the 2.3% claim, but rather the original claim that the top 100 tokens on the front page weren’t scams.
I think the majority of those top 100 tokens are not properly audited with tangible assets backing them.
It's not misconceptions, it's accepting that the whole ecosystem is fraudulent, and that as an intermediation layer, uniswap fails to protect consumers. If any payment processor was letting 97.7% of its merchant users be fraudulent, they would be closed yesterday.
This paper is discussing listings and not volume. No one is claiming these tokens had any amount of meaningful volume and most likely weren't even traded by a real user. If 97% of Uniswap's volume was fraudulent then I wouldn't even give it the time of day.
To fix your analogy, it's like a payment processor having thousands of fake storefronts able to accept payment. If 97% of their volume was to those fake entities then definitely shut them down but most of the volume would be Amazon and Walmart and the fake storefronts wouldn't even be a rounding error.
This is logically incoherent. It would only be true if you chose a token completely at random instead of choosing a widely-used token you wanted to use.
Reminds me of "it either works or it doesn't, so there's a 50/50 chance"
Trusting all individuals to make safe decisions in a marketplace flooded with scams is just not scalable. You cannot educate every user in how to identify a scam.
And excluding users who haven't gone through that education hardly seems like the democratization of finance that these services advertise.
If we’re talking about Uniswap specifically, it actually does a decent job of adding guardrails (only listing curated tokens from the Token Lists standard) and warning about unsafe actions (confirmation prompts when you are adding an unlisted token to swap).
So uneducated users would really have to go out of their way to get scammed through there. Like having to go out of their way to follow up on a solicitation from something caught in a Gmail spam filter.
As much as If genuinely like a marketplace for shitcoin/scamcoins that I can gamble on and hope to beat the exit dump crash, I admit that uneducated consumers protections probably should trump my desires to participate in this gambles.
Any system that is open to the public will (sadly) have to deal with bad actors.
85% of all email is spam[1]. But that's not a value judgment on the technology--Humanity can still get value from email.
Sturgeon's law says 90% of everything is crap. If you deal with other humans, you need a way to sift through that crap. In the case of email, that means use a spam filter. In the case of crypto, it means don't buy shitcoins.
I'm not. One of the points is that I don't have to as TokenLists provides a distributed way of curating legitimate tokens which means you can choose who you personally trust to determine what is legitimate.
Some comments: While the report findings might be correct on the number, the terminology and conclusion in related discussion are often not. No real person ever traded these 26k tokens. The creation of liquidity pool should not be considered a launch, as you still somehow need to convince other people to buy it from you. Nothing was "launched".
These trading pairs are more akin to spam, to show up in the search results (somewhere else, do not show up on Uniswap). Other research find the scam volume is way less than 1% of the total trading volume. Only looking this number does not reflect the true health of the market or the controls Uniswap has in place to prevent trading these tokens.
We also do not call fake Viagram advertising email rug pull, even if it is clearly intended to steal your money without making your dick hard.
spam email is a good analogy. Email would suck if you needed some central authority to grant you permission to send. spam filters work on email and will get better for crypto.
Sure, because anyone can create and list a token on Uniswap. The only cost are the gas fees. That doesn't mean those tokens have any real liquidity or are being used. Just like anyone can create a website and put it online. The only cost are the hosting fees. That doesn't mean it'll get any visitors.
This seems like an unfair retort to me. The point of the website analogy was not to suggest that the percentage of malicious websites is comparable to the number of malicious coins. It was to draw an analogy to another distributed system with low barriers to entry and where people dabble semi-seriously.
I think that the parent makes a fair point. I'm willing to go so far as to agree that suddenly yanking support for a coin you created and put up for sale on a public marketplace can be described as pulling the rug on that coin. I don't think I would assume, though, that doing so necessarily constitutes a deliberate attempt to scam people.
Is it irresponsible? Perhaps. Though that's a somewhat subjective judgment, and I recognize that the crypto community's culture around these things runs in sharp contrast to how I think about public marketplaces, so perhaps it wouldn't be fair of me to make a value judgment.
Is it worrying? I suppose I can appreciate arguments that the kinds of regulation necessary to prevent such behavior are themselves harmful, and that this sort of thing is acceptable or even desirable insofar as it indicates the market's level of freedom. I can't bring myself to agree, though. I personally would not want to participate in a securities exchange where such behavior is rampant.
But not all worrying or irresponsible behavior is a scam.
Of course not, but the point is that the lower the barrier to entry is, the greater the scammer-to-non-scammer ratio will be, as long as money is involved, or could be involved, either directly or indirectly.
The point is that an unsuspecting/ naive user of malicious emails will be tricked into giving away their personal or banking info. Or sending money to “renew their car warranty” and what have you.
I don’t see how that’s any different that an unsuspecting/ native user rushing head first into some random scam coin they have no business paying for and getting rugged.
Some people are stupid. That will always be the case. And there will always be dirtbags trying to take advantage of them. That’s a part of life. Has nothing to do with the underlying technology of crypto.
There's a lot of reasons to dislike cryptocurrencies but the fact you can manually paste an address to the uniswap interface and trade a well-performing token to a poor-performing one (the definition of scam used here) is definitely not one of them.
If you are investor and keep your money maybe you shouldn't do startups. It's completely valid answer and chosen more prevalently when the times come that encourage you to tighten your belt.
Both of them are artificially scarce. Both of them are mainly about buying cute pictures. And at least for a lot of the buyers, it's about speculating the price will go up in the future.
Indeed a very complex question to answer. One of the most interesting parts of the paper is the discussion of the various types of scam — simple rug pull, sell rug pull, smart contract trap door of various flavors.
From their paper, I think sympathetic to your POV:
> For example, it is not clear that cryptocurrencies such as Doge or Shiba have any use case or intrinsic value, but they are among the most popular meme-coins. In our framework, we say that a token has no intrinsic value or use case if the developer knows that the trading price with respect to USD will eventually be zero. In other words, a tradable malicious token in Uniswap induces a zero-sum game between the users and the developers, i.e. the incentives for the investors are not aligned with those of the token creators. Therefore, the main difference between malicious and non-malicious tokens is the developer’s intentionality towards the token. One of the main problems of these definitions is that it is unfeasible to distinguish between scam tokens and under-performing or abandoned projects without accurate off-chain data.
> The terms scam and malicious token are not being used identically by all researchers. For example, papers such as
[44] use the terms scam and under-performing token indistinguishably, leading to inaccurate results and classifications.
In the current paper, we define a malicious token as one released by a developer or a group of developers with no
intrinsic value or use case.
I guess the test token I put on Uniswap is a scam then.
That’s a really strange definition of “scam”. I would simply define a scam as something where you’re promised to receive something (a certain token, a token that is backed up by something, a promise of future work, et cetera), and then don’t receive it (either now or in the future).
If I simply create a meme token and sell it to someone who speculates that it will increase in value, I don’t see how that can be considered a scam.
You buy a digital claim to own a non-scarce jpeg, that anyone can copy, but only you can "own". Problem is, to enforce your ownership rights you are relying on the security of whatever the underlying block chain is.
And, we know that Ethereum has changed history in the past (DAO failure in 2016), and they can do it again anytime a majority of the stakeholders think it ought to be done.
I think rule-of-law property rights are more robust, or simply owning bitcoin, as its just a protocol without a group of people in change.
It's even less than that; the NFT doesn't show that you exclusively 'own' anything. Another NFT can exist that points to the same JPEG, it could be on another blockchain or even the same one. Which NFT is the 'real' one?
You've been living under a rock and missed the Pokemon card craze in the past few years then.
"Target stores around the country have pre-sunrise lines around the block, and the trading card sections look like bread aisles before a snowstorm or toilet paper aisles at the start of the COVID-19 pandemic as fans, collectors, and resellers are trying to arbitrage tins of Pokémon cards that can be resold for an easy profit."[1]
"The intense demand for Pokémon trading cards, which steadily rose in recent years then rocketed up even more during the pandemic, has caused Target to temporarily suspend sales of the cards, citing a threat to the safety of customers and workers."[2]
"You can probably guess what happened next. Thanks to the increased visibility of card collecting on social media, along with a surge in grading services pricing out high-value collectibles, folks are practically camping out of stores just to get the latest Pokémon card shipment. Everyone wants to find a rare card that they can flip for thousands of dollars, just like they’ve seen in the news."[3]
"YouTuber Logan Paul (USA) has recently acquired a coveted PSA Grade 10 Pikachu Illustrator card following a record-breaking trade worth $5,275,000 (£3,862,424 / €4,477,146)."[4]
"Healing Crystals" , multi billion dollar industry, I don't see anyone complaining about the pollution of water ways, destructive mines and slave labor... But NFTs are a scam...
Have you missed streamers blowing millions of dollars on Pokémon cards live? A lot of people are indeed spending 10k or 100k or even millions on Pokémon cards (one card was sold for $5 million last year, but the real money is from people buying packs upon packs).
I was a fan of Fate/Extra and Fate/Extella, so I was curious about Fate/Grand Order and found it very hard to run on any Android emulators, the NVIVIA Shield, AMZN Fire tablets and the other off-brand Android devices I have a huge collection of. Eventually I got it running and found the English translations make no sense at all, but it is moe-driven more than story driven and it wouldn't bother fans at all.
Pokemon cards were sold for kids to have fun, and in the end they actually are valuable, whereas NFTs were marketed as valuable, and in the end kids make fun of people buying them.
They're only valuable due to artificial scarcity, just like NFTs. You could always copy the cards (just like you could 'right click save' an NFT image), although you wouldn't be able to play in a tournament with them, and The Pokemon Company could print more official cards of the most popular cards, but they don't because they want to fuel this craze because it makes them stupid amounts of money.
And the vast number of collectors sure as hell aren't playing games with the valuable cards they collected the past few years. Logan Paul didn't spend $5 million on a Pokemon card just so he had it to play in a Pokemon tournament, especially since it's just an illustrator promo card anyway, doesn't even have a function in the game (at least as far as I can tell, I don't follow this closely, I did have a Magic The Gathering phase, though, which was the OG TCG and also has its own craziness).
I’d probably like to charitably interpret some of these ‘no real value’ tokens as “debugging” or “dry-run” or some other kind of harmless experiment.
They didn’t measure how much value was stolen by rug-pull maneuvers. Did 10,000 ‘fake’ tokens start up, run a while, and rug-pull taking $1 with them? I’d guess that’s just ‘debugging’. Did a few big rug pulls run away with a million dollars? Can we detect _those_ better?
This title should be changed. It is heavily editorialized. It’s not what the paper is about. It is just causing the typical crypto haters to get out their pitch forks.
This article is about fraud detection. The conversation should really be about the machine learning techniques used, and the actual conclusion, which is using those techniques, ” This implies that new malicious tokens can be detected prior to the malicious act,and, on the other hand, tokens supported by a strong project can also detected at an early stage.”
Yes, they built a fraud detection system... and with it discovered that 97.7% of tokens were rug pulls
"Based on this theoretical foundation, we provided a methodology to find rug pulls that had already been executed. Not surprisingly, we found that more than the 97,7% of the tokens labelled were rug pulls."
I understand, but it isn’t the conclusion. I read it obviously, the sentence I quoted is in the conclusion as well. The title is spurring the same old boring “crypo bad/ crypto good” arguments we’ve been over 1000 times.
We should be talking about the techniques described in the paper, and the fact that they determined it is possible to detect early on with some confidence if a project is solid, or a scam.
This should be a positive for the “crypto bad” folks if you ask me. But this is getting lost.
Bit higher than expected but not that surprising. Deploying a new token costs almost nothing, but may lead to outsized rewards for scammer. It can be easily automated.
They defined it as a sudden and complete disappearance of the coin's liquidity. And they defend this as being indicative of a rug pull because it's pretty much definitional: a rug pull is when only one entity is propping up a coin's market in order to make it seem viable, and then suddenly disappears, taking all the liquidity with them. That liquidity is the very "rug" being pulled.
They suggest that this doesn't look like an organic collapse because it happens all at once, in a coordinated manner. I don't have the expertise to evaluate that claim, but it at least seems plausible.
What seems more problematic to me is that I'm not convinced that all of these events can be considered malicious. I would think that me just dicking around on the blockchain looks the same. Maybe I try making a coin, realize getting it off the ground is not going to be worth the effort or otherwise lose interest, and then abandon the project even before it really sells much. If so, then what percentage of these coins can be explained that way? Quite a large one, I'm guessing.
Perhaps there's another argument to be made, though, that that is not a good defense of the health/safety of the market for general consumers. Lots of coins that nobody should be touching because they aren't serious perhaps doesn't look much different from lots of legitimate scams from a consumer perspective. Either way, the story for consumers is a rather rigid formulation of "caveat emptor".
For reference, Uniswap is a cryptocurrency exchange which uses a decentralized network protocol. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts.
Imagine you want to trade your gold for silver. You literally possess the physical gold.
FTX/centralized exchange: deposit your gold, counterparty deposits silver. FTX possesses the physical quantities and gives you both receipts. You agree to you exchange rate and FTX issues new receipts for what you hold, old receipts are void. You can use the new receipt to withdraw your gold and silver[0].
Uniswap: You take the amount of gold you want to trade to a building. You get to the building and exchange your physical gold for physical silver directly. You leave with your physical silver. You spent a little gold on the way to afford gasoline for the trip.
These are technically inaccurate but give an overall correct idea of the difference.
[0]most crypto users don't understand how to possess their own crypto (control private keys) so they skip the last step and leave the 'gold/silver' (crypto) in the physical custody of the exchange.
It's an exchange developed on Ethereum platform. Basically what FTX is but without a central authority. You may wonder why people don't use Uniswap instead of FTX, Binance etc. The answer is the same reason crypto payments failed: high transaction fees.
Crypto is pitched as a decentralized alternative to central bank currencies. Which, I think, is a great idea, especially with CBDCs (which are really going to be the catalyst for fascism on steroids, especially in quasi-democracies) on the horizon.
My biggest problem with crypto is that most people who buy and hold it are not truly libertarians looking to scale up usability in the space. They're really just gamblers who want their investment to go to $1M per bitcoin so they can convert to fiat (the irony) and retire to the Bahamas and life the big life.
Otherwise, why does the entire industry keep banging on about $100K EOY?
And I won't begrudge you that, after all, it's your money, isn't it?
But until crypto makes a hard pivot from being a speculative investment to an ecosystem encouraging day-to-dy usage, I just don't believe it has any long-term usage.
In addition, I think Zuckerberg had an extremely brilliant idea when he wanted to make a stablecoin tied to a basket of currencies - it's be stable enough to use on a day-to-day basis, and it'd still be a crypto, at least theoretically.
That's the thing with decentralization, since anyone can participate you will always get a bunch of gamblers because most people are not in it for ideology but rather to make a buck. That's just human nature. Is it possible to create incentives to keep the gamblers way? I haven't come across any great ideas so far.
It's actually worse than that. The entire selling point of crypto is that it's an ungoverned unregulated financial wild west. That makes this space very attractive for people who want to do things that would be more difficult in a regulated environment where actions have legal consequences; and the more such actors enter the space, the more people who do not want to be around such actors leave. So eventually you end up with a population of half a dozen confused normies and a gazillion scammers and gamblers.
It's exactly the same effect as evaporative cooling of online social groups: if you don't set boundaries, trolls kicked out of places that do gather in your space and people who don't like being in such a space leave, until your space is nearly all trolls and one morning you wake up to find you've made a *chan again.
The argument goes both ways - a lot of people investing on the stock market are also gamblers betting that their investments will go to the moon. The only difference is that a lot of non-performing companies get culled before they IPO or shortly after. And after a company lists, the market tends to (although not always) re-value it accordingly.
So, of course they'll be gamblers in crypto and every new field - what matters is for there to be a critical mass of builders making things that can be used on a day-to-day basis vs. those trying to hitch a ride on the bandwagon.
I never said that. Theoretically, every investment is a gamble in a sense. After all, we've seen high-flying companies crash and burn overnight. FTX is not the first, nor will it be the last.
Even high-fliers like Apple were quite close to collapsing sometime in the past, yet people still poured money into them.
The only difference is that they focused on shipping products people actually wanted to buy.
All I'm saying is that the gambling should be backed up by a significant amount of work aimed at usability, call it a high signal-to-noise ratio, if you will.
so to be speak, Uniswap is the greatest invention of the humankind. It cuts the middle man, regulators, anyone calls himself accredited. The more beautiful thing is that you just need an elementary math to understand how the pricing works.
The "popularity" issue does not help a payments/transaction system. I believe in the long term it will die. A merchant that tried accepting crypto payments and found that in the busiest day its clients couldn't pay due the high transaction fees will abandon the crypto payments entirely and wont come back when they get cheaper.
Of course the system may still be used for the types of transactions that cannot be easily replaced by mainstreem methods (crypto scams, fraud payments, pump/dump tokens etc) but I believe in the end it will die because the number of white sheeps will get thinner.
It's based on eth transaction protocol which failed both for payment systems("crypto payments") and trade systems(i.e majority of trade is on cex platforms)
As of this writing it is $2.39 to perform a swap on Ethereum Uniswap which isn't great but not too bad when compared to something like Coinbase. On L2s it's around 10 cents which I think most people would agree is acceptable.
I think it's less important how high are the fees right now. The fact tomorrow the fees could increase to $1000 makes the system unreliable for long term investments.
The crypto payments for example had few real chances to become mainstrean but their limitations(high transaction fees, high congestion, low throughput) proved they are not practical.
well, trading fee is/was around 0.25%. So it is pretty much okay. I think you meant gas fees. That's fine, you can look for alternatives for that. I think as of now, every chain has uniswap equivalent. (So, running a dex is a profitable business). The only difference is that amount of liqudity and chain properties.( like security vs).
Users do not see these tokens unless they actively search them out. Uniswap uses the TokenList standard (https://tokenlists.org/) and by default users only see tokens such as the top 100 projects on CoinGecko. There are many lists created by reputable players such as Aave and Gemini which cover the entire gamut of projects users want to trade without exposing end users to scam tokens.
I believe this is a good system and has worked well as having any kind of listing process or even a DAO introduces subjectivity and provides points of capture for bad actors. With an open listing process and standards like TokenLists we can say that Uniswap is truly a public good and will be around as long as we need it which provides a guaranteed way to swap any asset for any other asset no matter who created it or how controversial it is which is a good primitive for humanity to be able to rely on.