Protecting Users from Scams and Rug Pulls on BNB Chain

Over the weekend, BNB Chain ‘flipped’ Ethereum in terms of the number of unique wallets. Today, there are 210 million unique wallet addresses on BNB Chain. This is thanks to a vibrant, diverse, and innovative community of Web3 developers and projects. Yet, with such scale comes responsibility.

Today, there are two claims often levelled towards BNB Chain. That it is too centralized, and a home for rug pulls and scammers.

We recently addressed the question of centralization and reliance on Binance.  Binance also clarified any questions regarding its proximity with BNB Chain.

But, let’s talk about Rug Pulls and Scams. The topic is timely, due to recent research by Solidus Labs that suggests ‘nearly 12% of all BEP-20 tokens, the standard token on BNB chain, are tied to scams.’

It’s critical the BNB Chain community does not shy away from the fact that rug pulls and scams occur in Web3.

BNB Chain is a permissionless network with double the size of total transactions and three times the number of daily active addresses on Ethereum. This is why BNB Chain attracts bad actors.

Another important factor is that - beyond technical knowledge - there is a low barrier to entry into Web3. The frictionless way to deploy smart contracts is the very essence of what makes Web3 and blockchain democratic and diverse. But, this doesn't mean we can turn our back on security.

Deploying fraudulent smart contracts does not mean that users are being scammed. In fact, it is more like a trap being set, waiting for users to interact with it. This is exactly what the BNB Chain community is addressing. The identification and warning of potential scammers as soon as possible.

Combating Bad Actors

So, what is BNB Chain doing to address the issue of scams and rug pulls?

The two main weapons in BNB Chain’s armory today are AvengerDAO and Red Alarm.

AvengerDAO is a BNB Chain community-run API that brings together all ecosystem partners to protect BNB Chain users. It protects from financial losses and malicious contracts. It also deters malicious actors. It also raises awareness about safety and security in the ecosystem and encourages further DLT adoption by setting an industry standard for safe practices

AvengerDAO is a significant step forward in Web3 user safety. Founded by leading security audit firms AvengerDAO APIs integrate with DEXes, Wallets, and Blockchain Explorers. This allows users to scan token contracts. It also helps users scan tokens in real-time to ensure they are transacting safely.

In fact, BNB Chain is the only blockchain that has an AvengerDAO.

Red Alarm is part of BNB Chain's Web3 dApp store, DappBay. It helps users to discover innovative Web3 projects. DappBay features Red Alarm to assess project risk levels in real time. It alerts users of potentially risky dApps. Most of the notable malicious applications and smart contracts are exposed and flagged.

So, are AvengerDAO and Red Alarm working?

Today, Red Alarm has flagged over 160 projects since its launch, just four months ago. The full list is here.

Besides AvengerDAO and Red Alarm, there is also Hashdit. Hashdit warns users in real time about potential fraudulent projects.

So there we have it.  Progress on addressing the number of Web3 scams and rug pulls, but still so much more work to do.

Let’s finish by going back to the report by Solidus Labs.

Yes, it is true that with such a large user base and a frictionless development environment, bad actors are unavoidable. Yet, the figures do not provide a conclusive argument against the inherent benefits of mass adoption.'

While Solidus data indicates that scams and rug pulls have been deployed on Ethereum and BNB Chain, the fact is that as mass adoption becomes a reality, the number of bad actors will also grow. The question then becomes - who is able and actively addressing these security concerns.

As a next step, we’ll be reaching out to Solidus Labs to see if they are interested in joining AvengerDAO.

It is the responsibility of all leaders to contribute to a safe Web3.  This is how developers, start-ups, and users know that the good actors will be the ones that prevail.

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