Did DeFi100 (D100) Really Scam Investors?

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The DeFi100 project became infamous on May 22, after reportedly scamming investors of $32M and replacing its website with an offensive message. DeFi100 was one of the Binance Smart Chain DeFi projects, and the news of a rug pull may have contributed to the market slide over the weekend. 

DeFi100 does an exit scam, homepage updated with this message after they raised $37 mn.

Lessons for beginners: Don't go for the moonshot, it will land on uranus 🇮🇳#IndiaWantsCrypto #cryptocrash pic.twitter.com/uEegQQMID2

— Swadeshi Nakamoto (@desi_nakamoto) May 22, 2021

But did DeFi100 Rebase really scam its users? The project itself continues to claim it is actually legitimate, and the news of the scam are exaggerated or fake. In fact, the D100 token continues to be transferred on the Binance Smart Chain, with a current total supply around 3.7M tokens. The supply has varied between 2 and 4M tokens depending on trading conditions and rebase decisions.

What is the Utility of DeFi100

The D100 token aims to create an index of the top 100 DeFi tokens, thus requiring only one asset to gain the passive income from their gains. Because D100 uses BSC, its fees are set to be much lower in comparison to Ethereum-based DeFi. 

However, to achieve its indexing, the D100 must keep rebasing itself and changing its supply. Unfortunately, the process is faulty. According to users, the team must sometimes rebase the supply manually, leading to errors. 

One such error may have been presented as a rug pull or an exit scam. The team later spoke out on social media, defending the fact that the protocol never even held $32M in user funds. 

1/2 It’s been said that DEFI100 scammed for $32 million. The highest market cap project ever had was less than $2 million and project never held any investors fund!
Rumours of scamming for 32 mil are false and baseless.

— DEFI100 (@DEFI100) May 23, 2021

So despite the initial fears, DeFi100 is actually an existing project, and the $32M did not end up in the hands of an individual in Indonesia, as suggested by Reddit digital sleuthing. The risks of DeFi100 were strictly connected to the protocol’s own flaws.

Unstable Supply, Unreliable Price Information

The project comes with warnings that similar faulty rebases have happened in the past. So while the token promises to track the success of DeFi, the D100 supply and price are highly unpredictable and may lead to sudden losses. The team can also manually change the amount of tokens held without warning. 

At this point, DeFi100 is either a faulty project with a buggy smart contract, or has the potential to perform rebases deliberately and harm investors. The D100 project claims its price and elastic supply are dependent on decentralized oracles. However, oracles may give a distorted price different from the expectations of buyers.

The exit scam message also underlined the fact that the addition of multiple new projects could mix dishonest teams with the potentially good crypto startups. The demand for high returns in what has become one of the biggest crypto market booms may bring another batch of risky tokens.

Can D100 Still be a Good Investment

D100 started trading in March, reaching a peak at $3.13 before crashing to its current levels. D100 prices are highly unpredictable due to a mix of volatile trading and rebases. Currently, the token trades at $0.09, on extremely thin volumes. 

For now, D100 looks like an overhyped BSC token which lost the initial drive. While the project still has a PancakeSwap pairing, it has lost credibility and liquidity. For now, D100 is one of the worst possible investments, even though the team keeps promising lucrative rebases, airdrops and token price appreciation. 

D100 is also only available on the highly illiquid Bilaxy exchange. The token also has pairs on PancakeSwap and BakerySwap. Unfortunately, the latest PancakeSwap trade happened about three days ago. The token ticker is also nowhere to be found on PancakeSwap. 

What is the Alternative for a DeFi Index Token? 

Tracking the entire DeFi market is appealing, as it is impossible to pay attention to thousands of assets and pairings. Some of the proxy investments in the DeFi space include Maker (MKR) and Yearn Finance (YFI). 

There is also a dedicated token, DeFi Pulse Index (DPI) that tracks the overall sentiment. DPI has a highly liquidi decentralized pairing on UniSwap. 

Even holding Binance Coin (BNB), the native asset of the Binance Exchange, can reflect the growth of decentralized trading. 

How BSC Tokens are Performing After the Market Slide?

BSC tokens have a reported total market capitalization above $79B, and are an important and growing market class. Besides Binance Coin (BNB), which fuels some of the DeFi trading, there are more liquid assets established through both centralized and decentralized trading. 

The BSC decentralized economy shrank to about $16.5B from a peak near $30B, chiefly led by the slide in most asset prices. The Ethereum DeFi space now holds the equivalent of $57B. In the past day, however, most BSC tokens added above 20% to their market price. The rapid recovery is currently erasing the rapid losses that exceeded 60%. 

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