The High Stakes of Lowcap Trading

In 2023, the cryptocurrency market has seen an alarming amount of money lost due to poor investment choices, amounting to $624 million. The losses are particularly significant in the trading of low market capitalization tokens, commonly known as "lowcaps." These tokens often promise high returns but come with equally high risks, including the dreaded "rug pulls," where the token's value suddenly drops, leaving investors with significant losses.

The Tool That Makes a Difference: DeDotFi

A Twitter thread by @dealerdefi introduced DeDotFi, a tool designed to help investors make informed decisions by analyzing various aspects of a token. DeDotFi offers features like contract safety checks, identification of high-risk features, liquidity analysis, token distribution scrutiny, and comprehensive reports.

Case Study: The Rise and Fall of "Pepe" Token

The thread highlighted a token named "Pepe," which had gained 10x in value within 24 hours. However, using DeDotFi's analysis tools, the token was found to have several vulnerabilities that contributed to its subsequent 99% drop in value within the next 24 hours.

High-Risk Features

DeDotFi's scanner identified two high-risk items in Pepe's contract:

  1. Transfer Fee: The fee structure was undefined and modifiable, allowing the owner to change the commission by up to 100% after purchase.

  2. Low Liquidity: This could result in high volatility or even loss of swap functionality, trapping investors' funds.

Medium-Risk Features

The scanner also found three medium-risk items:

  1. The smart contract was deployed less than 14 days ago, indicating it was relatively new and untested.

  2. A private wallet owned a significant percentage of the token's total supply, creating a centralization risk.

  3. The contract used a type of authorization that could potentially be exploited through other malicious contracts.

Conclusion: An Essential Tool for Crypto Traders

DeDotFi proves to be a must-have tool for anyone trading in the volatile world of lowcap tokens. It provides a comprehensive analysis that can help investors avoid falling victim to obvious rug pulls and other high-risk scenarios. As the crypto market continues to evolve, tools like DeDotFi become increasingly crucial for investor protection.

Source: @DealerDeFi