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I've come across a new DEX that claims to address the impermanent loss issue in a novel way. I've researched honeypots and it seems like a honeypot is usually done in the way of a token contract with some exploits built in.

While the reward for providing liquidity in this DEX is paid in the form of their own token, I'm more worried about if my provided USDC/USDT can be extracted, but I cannot figure it out looking at the contract. If the token rugs that's just what it is, nothing lost nothing gained - I've been able to both add and remove liquidity and sell the rewards with no issue, but that doesn't mean they won't suddenly pull the page down and leave me with liquidity in a contract I can't access - or what? Is this fear rational?

Let me know if you need the pool contract, I don't know if I'm allowed to post a link and I do not wish to shill anything, just to know if I'm about to screw myself or if I can safely provide liquidity and thank you in advance.

DKPete175
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In the current market conditions everything with return of investment greater than 3-4% is probably a scam.

Hristo Todorov
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  • This answer is not factually correct, as in any market condition, there are always multiple methods and funds that will outperform the market average. Thus that "everything" perform sub-4% is not correct and has no substance in the answer. – Mikko Ohtamaa Mar 20 '23 at 11:57
  • Okay, agree with you. Added most probably is a scam. – Hristo Todorov Mar 20 '23 at 12:13
  • That’s an opinion I don’t share - looking at everything yielding more than the ‘risk free’ interest is somewhat naive. I believe even most blue chip protocols initially had to deal out decent incentives for early users, otherwise they would be dead on arrival. While I agree that scams are everywhere, I disagree on your view that everything yielding more than 4%is a scam – DKPete175 Mar 21 '23 at 15:12
  • @DKPete175 yep I am not hard caping that everything above 4% is scam, I am meaning that everything that yields more than the average for the markets seems a little bit fishy. – Hristo Todorov Mar 22 '23 at 12:25
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While the reward for providing liquidity in this DEX is paid in the form of their own token, I'm more worried about if my provided USDC/USDT can be extracted, but I cannot figure it out looking at the contract.

If you cannot do your own due diligence, then simply

  • Don't take the risk
  • Be prepared to take the risk that you lose 100% principal of your capital

These is no gray area.

Let me know if you need the pool contract, I don't know if I'm allowed to post a link and I do not wish to shill anything, just to know if I'm about to screw myself or if I can safely provide liquidity and thank you in advance.

Professional audit companies cost a lot. There is no one willing to do this work you for free, or it would be just stupid. See the answer here how to find smart contract auditors.

Mikko Ohtamaa
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  • Thank you for your input. I’ve run it through several smart contract checkers, I guess my question now is: is there a know scam/honeypot where the liquidity pools and not the token is compromised? This protocol and the LPs is based on uniswap v2, and the only risk I found using the checkers was that the contract can mint - which makes sense as it’s an LP – DKPete175 Mar 21 '23 at 15:07
  • You either trust yourself with your judgement, or you don't. If you do not think you do not find risks, then it is up to yourself to trust your own judgement. Other people here are not going to do your work for you. – Mikko Ohtamaa Mar 21 '23 at 16:15