GameFi

Identifying Scams in GameFi projects

The gaming industry has been one of the most prominent players in the market and its prospects have never declined. With the advent of blockchain-based decentralized gaming, better known as GameFi, the gaming sector turned the page and started development towards a new phase. Applying blockchain technology and Web 3.0 concepts, the recent tide of new games has created a new revolution in the global community. Blockchain gaming and the incorporation of NFTs have been earnestly fascinating new players to involve in the development process, besides enjoying their favorite gameplays.

Despite the volatility of the crypto market, GameFi has constantly stepped up and the price of its tokens is routinely increasing because of its NFT element. Investors nowadays are not attending to the need to improve the game mechanics. They are rather focused on earning profit out of reselling the in-game assets. So, before you put your money into some trending project, you must thoroughly analyze the marketing and technological peripheral of a project, along with the advantage its token will grant if you invest in it. But this is the point where you might get tricked.

In the crowd of blockchain-based projects, there is a high probability of every random one being dishonest with its offerings. With NFTs and cryptocurrency becoming an integral part of this framework, one needs to be wary about the alluring promises from any GameFi project as it could very well be a potential scam. One of the biggest scams recently happened in Q3 2021 in the form of Squid cryptocurrency, which was based on the then-famous Squid Game show, as it nosedived to almost $0 after reaching the peak of $2800 at a point time. As per many reports, the scammers got away with $3.38M of people’s money through rug pull. Now the question arises – How can we avoid such scams? And the simple strategy is to identify them! Let’s have a look into this.

How to spot a scam game?

It is observed that NFT games, focused on scamming the community, are generally wide-reaching, sudden pop-ups in the market, but heavily planned on accomplishing their purpose to ransack the community in a short period. They target such investors who are not experts but novices, so they can tempt amateur investors with mesmerising commercials. Hence, before putting the money into any project, one must be aware of the probabilities of such a trap and be wary in the following ways:

1. Their Team:

If someone is presenting his new project in the global market, he must be someone with stockpiled knowledge and experience. Their genuine and detailed information on Internet, along with their track record of career, gives an adequate amount of reliability factor. On the other hand, if a new project’s team stays completely anonymous and no information can be found on the Internet, then that is a sign of something shady, regardless of the scale on which it is launched and being promoted in the market.

2. Their social network:

A quick look and analysis of the social network of a GameFi project, which is asking the community to invest in the prospects of incredible success in the future, will give you a strong hunch on its credibility. You must look out for the size of the bunch of people following them, along with the essence of their responses in the community, because that would portray if the community is just as inexperienced as you are and vulnerable to being mass-scammed, or if experts are involved on whose project analysis you can probably rely on.

3. Smart contract:

With any of the easily-available online amenities, like Etherscan, BscScan, etc. you can go through the smart contracts incorporated in the project to get detailed data on the time when the project was formed, launched in the market, its users, and information on its tokens. You can check or get them checked in any community of experts, to make a calculated assessment of investing in that project.

4. Network marketing:

Multi-Level Marketing (MLM) is a popular system on which a good deal of GameFi projects are framed. MLM has constantly been successful in drawing the interest of new users in the projects it has been involved in, however, if MLM is the project’s only source of revenue and still they are promising huge profits to its users, then it is highly probable that the project is a big scam; because any concrete project must have value-added channels and structures for their revenue and profit for investors.

Conclusion:

Towards the end of this thought process, it is imperative to highlight that the projects you should beware of, often start with just a white paper, an attractive website, and a token listing on a crypto exchange. Fictional employees and fake partnerships are common traps to mislead new investors. One must also try to engage in the gameplay, because if the game is not real then nothing they say is, and it simply could be a rug-pull scheme.

As a start-up or an established organization looking to launch a hybrid crypto exchange, utilizing the best security features of CEX and DEX to avoid scams, you can leverage the blockchain expertise, deep domain knowledge, and market-leading features of Algobitz. Our experienced blockchain engineers and SMEs enable you to pivot faster and smarter to achieve your business goals and penetrate the market with an impact, without falling for such scam projects.

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