The brand-new Base blockchain, introduced by popular crypto exchange Coinbase Global Inc., faced an unexpected challenge shortly after its launch this month. Due to its open accessibility, more than 500 fraudulent tokens have been reportedly deployed, highlighting the susceptibility of these networks to misuse.
Coinbase launched the blockchain with the aim of fostering a developer community that could create decentralized apps (Dapps) for its users, thereby enhancing engagement. As one of Ethereum’s Layer 2 networks, the network streamlines the creation of dapps that connect to the exchange’s products and tools.
Base Network Witnesses a Surge of Scam Tokens
Between mid-July and Base’s public debut in August, around 500 scam tokens like BASEPEPE (BPEPE) and Baby Yoda (YODA) were introduced on the blockchain. Solidus Labs, a New York firm focused on monitoring suspicious crypto transactions, revealed this discovery in an August 16th blog post.
Recent events, such as the SwirlLend exit scam and the RocketSwap exploit, indicate ongoing troubles for the new layer-2 blockchain network.
Some 300 of these tokens allowed creators to generate an unlimited quantity of coins, a fact concealed from the platform’s users, leading to negative impacts on token values. However, an additional 60 tokens prevented buyers from reselling, while many others contained various hidden functions that allowed for illicit activities.
These scam tokens generated substantial trading volume on the blockchain’s native decentralized exchanges, reaching approximately $3.7 million. The manipulative tactics used by these scam creators extended beyond tokens, as other cryptocurrencies were also deceptively promoted and traded.
As a result, scammers successfully amassed roughly $2 million from these illicit activities, according to a report by Bloomberg on August 16th.
While Base is grappling with this issue, the report noted that fraudulent tokens are prevalent across various public blockchains, including Ethereum and the Binance Smart Chain network. In 2022, around 24% of newly launched tokens displayed signs of pump-and-dump schemes, according to Chainalysis, a popular blockchain data platform.
Despite these initial challenges, Base remains a promising addition to the crypto landscape. Built on Ethereum’s robust foundation, it offers enhanced security, scalability, and cost-effectiveness, attracting developers and users alike. As the ecosystem evolves, the industry’s collective effort will be crucial in mitigating such scams and ensuring the growth of secure and trustworthy blockchain networks.