• Magnate Finance was the latest project to rug investors on Base, draining an estimated $6.5 million from the protocol.
• Following the exploit, prominent on-chain sleuth ZachXBT revealed that the deployers of Magnate Finance were repeat exit scammers.
• This article offers tips to avoid such rugpulls in the future.
What Happened with Magnate Finance?
On Friday, August 25, PeckShield reported that deployers of the Magnate Finance protocol had conducted an exit scam, draining the protocol of an estimated $6.5 million. According to the blockchain security firm, scammers had performed a rugpull by manipulating prices on the protocol’s price oracle. Following this exploit, the project’s developers have erased their social media presence and website is no longer accessible.
Prominent On-Chain Sleuth Warning
Prominent on-chain sleuth ZachXBT had warned of this exploit barely two hours before it was reported by PeckShield, revealing that deployers of Magnate Finance were repeat exit scammers. The investigator linked them to Solfire rug which cost investors $4.8 million in January 2022 and Kokomo Finance rug which cost about $5.5 million in March 2023.
How to Stay Safe From Rugpulls
Rugpulls occur when project developers suddenly abscond with user assets or dump their holdings on investors, driving asset’s price into death spiral and hence result in loss for innocent investors who don’t know what’s happening behind curtains . This scam is neither new nor unique to Base but tends to thrive when there is hype and engagement like Base network . Typical Rugpull projects appear out of nowhere with anonymous developers , low & unlocked liquidity , token supply concentrated with only few wallets & haphazard websites etc as major red flags .
Tips To Avoid Rugpul Scams
Here are some tips you can use to protect yourself against these kinds of scams:
• Do your own research: Before investing your hard-earned money in any project make sure you do enough research about its background & credentials including team members , tokenomics etc . Also look at past events associated with similar projects & be aware if they have hidden agendas .
• Don’t chase yields: Invest as much as you can afford to lose and try not to get too carried away chasing higher yields . If something looks too good to be true then it probably is ! Be careful while investing in yield farming protocols as they involve high risk due lack proper regulations & lack of transparency around how funds are managed .
• Ask questions : When engaging with any kind of investment opportunity ask questions about it before committing funds so that you can fully understand risks involved . Make sure you read terms & conditions carefully before signing up for any type investments as well as double check all contracts related transactions for accuracy before making any decisions related investments .
• Monitor markets : It’s important keep track market trends & news related crypto space so you can stay informed about potential scams or other threats posed by malicious actors within industry such fraudsters , hackers etcetera who might try take advantage unsuspecting victims through fraudulent activities like phishing attempts , fake websites or other forms identity theft etcetera which could lead significant financial losses either directly or indirectly over time depending upon severity situation occurred due negligence user side while dealing cryptocurrencies online platforms like base network where one should always remain vigilant order secure funds invested therein properly without falling prey such attacks successfully !
Conclusion
By following these tips and remaining vigilant while investing online will help protect users from being taken advantage by bad actors looking make quick profit through nefarious activities like rugpulling which unfortunately has been quite common nowadays despite best efforts companies involved prevent such incidents from occurring future again!