Be Cautious of Airdropped Tokens

Be Cautious of Airdropped Tokens

The Ethereum Name Service, also known as ENS, is a protocol that sells NFTs of domains representing the wallet address. This became common in November when they began to airdrop tokens to users. Those that accepted the airdropped tokens gained governance powers over the ENS and could vote on future protocol decisions.

The airdropping became common by other Ethereum projects as well. The ENS airdrops to its users and other projects use this tactic to market for future clients. 

The process in which the user accepts the airdrop tokens can also differ. In some cases, the investor must choose to accept, and in other cases, you cannot reject. Rather tokens are automatically airdropped into the client’s wallet.

Airdrop has now become a common occurrence with scammers. It may be challenging to differentiate between whether an airdrop is safe to accept and investors should be cautious with. We will now discuss a few things to be aware of before accepting your next airdropped token. 

  • Research: 

When receiving an airdrop, if you have the option to claim, you should consider doing research regarding the distributor and see whether they are official. Even if the token seems reliable and safe to claim, often the project it belongs to benefits only select founders, so research is essential. The details can be found on its website or social media in the code. 

It’s preferable to wait before interacting if tokens arrive in your wallet due to an airdrop you didn’t initiate. Some airdrops will direct you to a website where you can sell or trade tokens; however, this might be a phishing effort to get access to your wallet.

  • Red Flags in Airdropped Tokens:

Be aware of red flags. There are a few common red flags usually found in the smart contract. For example, if a project’s funds are not protected by on-chain security, the project’s founders or developers may control their movement. This is common in “pump and dump” or “rug pull” scams, in which developers abandon a project and walk away with the money invested.

Another bad sign can be claiming tokens with the promise of receiving details later. Or if a project charges a fee when you attempt to swap or sell tokens or if it doesn’t allow for swaps and sells. 

Smart contracts are essential for crypto-based projects if a developer’s code has flaws, whether purposefully or unintentionally, the project may not be as efficient and stable.


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Be Cautious of Airdropped Tokens

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