Ever since the Dencun upgrade that dramatically lowered fees on Ethereum layer 2s, Coinbase’s not-very-decentralized rollup Base has surged in user numbers, transactions and total value locked.
As with the fast and cheap L1 blockchain Solana, most of the activity is being fuelled by degenerate gambling on memecoins, with hopefuls vying to make life-changing amounts of money from a small outlay.
But an investigation by Magazine has found the vast majority of memecoins on the platform have security vulnerabilities that could expose users to big losses.
And almost one in five are deliberately malicious and use a variety of tricks to steal user funds.
Magazine compiled security profiles of 1,000 new Base tokens — virtually all of them memecoins or scams — launched between March 19 to 25. This is not a comprehensive audit, as there are more than 380,000 ERC-20 tokens on Base currently; however, it is a representative sample of 1,000 tokens launched that week.
The tokens were analyzed by automated auditors on the trading analytics platform DEXTools to determine whether each project has implemented three fundamental security measures: locked liquidity, verified contracts and absence of honeypots.
For the uninitiated, that means:
Locked liquidity in decentralized finance (DeFi) is when a portion of a cryptocurrency’s trading pair is sealed by a smart contract. This directly addresses rug pull concerns.
A verified contract means that a project’s smart contract is accessible for investors to review possible risks.
A honeypot is a type of scam that lures investors with high-profit potential but prevents them from selling.
According to the analysis, 908 projects, or 90.8% of the sampled tokens, failed at least one of these security conditions.
While some security flaws may indicate potential illicit activities, they are just as likely to reflect memecoin creators’ lack of knowledge about proper security procedures, especially if they’ve launched a token as a joke or…
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