How to detect a potential scam project on AtomicHub and NeftyBlocks
This article first appeared on https://teletype.in/@cryptochertila/-G2hVeVbEN4. We kindly thank Illia, the author, for the permission to post this great resource. The original article is in Russian, but we bundled our writing powers to create an English version below:
Update: During the process of writing this article, the mentioned project has been confirmed as a scam and is now blacklisted on Neftyblocks.
Recently, with the rising popularity of NFT and P2E projects, the number of scam projects on WAX and other blockchains has increased significantly. Sadly there are a great number of people who invest in these projects under false assumptions, so I decided to write an article with some rules and base advice to avoid these scams.
Before we start it is worth noting that if your primary goal is to earn money from WAX projects and not to participate for collection value or playing, then you actually can make some money from these scams, but the risks of participating in these projects is very high.
As an example, I can call out the recent project OMINE.SPACE that later turned out to be a scam. I got one early pass for free, but sold it for $10 as soon as I realised this project was probably a scam. For me personally, the main red flag was that they had an invalid certificate on their website. However, they managed to collect a base of people who subsequently bought their passes for $50+, which surprised me quite a bit. Shortly after they disappear and covered up all traces.
We will now closely review a relatively recent project, which in my opinion is the purest scam. Hoever, while I am writing this article it is still live and active.
I am calling out this project based on my personal experience with 3 previous scams. To me it walks like a duck, quacks like a duck… But it is of course also possible that the developer was simply very unprepared and new to the P2E space.
It is up to you to draw your own conclusions. However, the tips I will share below will hopefully help you in the future to identify other scam projects.
Now let’s review a project called “On Wax Casino”
We begin our analysis on their ArtomicHub project page. Let’s go through it step by step.
Website
Each project must have a website. This is one of the mandatory requirements from AtomicHub and NeftyBlocks. If the project does not have a website, — congratulations, you just found the first suspicious clue.
Often, for projects on WAX, the websites are quite basic. It is worth comparing these to the site of a verified project and spot the differences.
I will give an example https://www.cosmicclash.io/
When you explore this site you can see that the team really spent time and money on creating a polished and informative resource.
Let’s compare that to the — already dead — website of OMINE.SPACE. The website has already been deleted and the screenshot below shows what I was able to retrieve, which explains why some images are missing. But even with those images, this was just a one-pager with a spinning GIF of the whitelist pass. No background info, no team info, no roadmap, no nothing.
One way to verify if you’re dealing with a scam is to try to search for similar images using the Google Images service. In case Google gives you identical pictures on the Internet in other sources, the project owner has clearly not created their own artwork and the project is most likely a scam. It will definitely not get a verification on the AtomicHub.
When we check Cosmic Clash artwork we see zero matches, only pictures related to the general space theme.
Every good project should show on their website: Whitepaper, Roadmap, Social networks (Discord, Telegram, Twitter), Team Info and (if applicable) sponsor info.
White Paper
A proper whitepaper should provide detailed, in-depth study of the project. Usually supported by the results of their own research or statistics collected from reliable sources.
One of the best whitepapers that I have read can be viewed here (click), after reading it I felt I understood what a level actually is.
Often, the whitepapers of projects on WAX look much more simple, but it still shows wether the team put many hours of effort into it or not.
Here are some more examples of good whitepapers of WAX projects:
Cosmic Clash
DeepMine
WarSpace
Now let’s look at the OwnCasino whitepaper as a bad example.
I think if you compare it with the good examples above, it really becomes clear where time and effort was spent, and where not.
There is no information about the tokenomics in this paper. There is no mentioning of the gameplay mechanics and there are no pictures. This was all written in a maximum of 1 afternoon and does not provide a good representation of the project.
If you see a minimalist whitepaper like this, it means that either the creator is completely new in the blockchain and WAX environment, or that the creator is a scammer.
Roadmap
The roadmap is a visualisation tool for a company’s development strategy, project launch stages and product promotion. It is a document or graphic file that describes the main steps planned towards their goal.
Naturally, the roadmap does not give you any direct guarantees, since it only outlines the ambition of the creator. But the scope of that ambition should give you a pretty good idea of how realistic this all sounds. If it speaks of becoming THE Metaverse, amassing millions of players within a matter of months and launching the token on Binance, you may assume this team won’t be able to make this all come true. A more realistic roadmap inspires more confidence in the team’s abilities.
I will give a few examples of proper roadmaps.
“On Wax Casino” does not have a roadmap at all, which does not inspire confidence in the project.
Social Networks
Twitter followers are often obtained through various giveaways, collaborations with other projects and, of course, with the help of bots.
In fact, it is difficult to distinguish between a project that has gained followers through cheating, and those who have received them through sweepstakes.
Even worthy projects with solid fundaments can have rather low activity.
For example, Hotcross has 130,000 subscribers, but on yesterday’s tweets there are only 60–100 likes.
Therefore, when analysing a project, I don’t really pay attention to Twitter too much.
The only thing I can truly advise is to check the originality of the posts for the text and pictures that appear in the tweets.
Discord
In my personal opinion, Discord servers from blockchain projects are almost always the same. A number of people in them is obtained by distributing whitelists for people who invite others, or by using invite events where the more people you invite, the bigger your reward.
I can only advise you to look at the number of people online at different times of day like morning, afternoon, evening and night. Everyone’s time zones are different. If all these moments show a stable indicator of offline users, then most likely these are bots.
Also monitor the activity of people in the chat and their interest in the project.
Telegram
A similar story to with Discord, however I did notice that scam projects often do not create Telegram channels at all. On the other hand, more reliable looking projects actively work with Telegram and even create several channels for different languages.
Developers
As a general rule it’s better to invest in projects whose team is not completely anonymous. Knowing the faces and names of the people accountable creates a level of trust for the long-term investors.
An ideal example of what a developer team page should look like can be found here.
For most projects the team info page ahows fake names, lack of surnames or art instead of real photo’s.
In this example, in addition to real photos, names and surnames, there is even a link to their LinkedIn.
For those who don’t know, LinkedIn is a global business-focused social network.
Important note: in the “Work Experience” tab on LinkedIn, you can write anything unverified. You could even lie you hold a job in the Pentagon, so do not trust this source too much.
They can also show any unverified information in Licenses & certification. Sometimes a “See credential” button is available there, which shows you the name of the profile owner on the certificate. In that case the certificate is most likely real. (but it is not impossible to cheat the system)
Sponsor
Not all projects have sponsors, but be sure to check them out of any are mentioned. Google them and find out what they are known for, or…well, whether they exist at all. You could even go one step further and write an email to the sponsor asking for confirmation if they are indeed sponsoring this project.
There was an interesting situation with the project called Record of Ragnarok. They had Netflix and Rakuten listed as sponsors. A lot of people laughed at the imagination of “these cheeky scammers”. Surely Netflix and Rakuten are not going to sponsor a WAX game? Still, I decided to write to them by mail and find out what was going on here.
I received an answer that these companies do not directly sponsor them, but they docooperate with the author of the manga this WAX game is based on. The manga itself has a series on Netflix and is sold through Rakuten stores. So you see, some projects that can look like a scam are actually not.
AtomicHub and NeftyBlocks
Atomiсhub is the largest NFT marketplace for WAX projects. Neftyblocks a bit smaller, but not to be dismissed.
Verification must be obtained on each marketplace separately. It is worth noting that the latest scam projects got verification on NeftyBlocks, so be cautious to fully trust that as a seal of approval.
To get whitelisted on NeftyBlocks, you need to:
1. Fill in a questionnaire with complete and correct information about you and your collection. The questionnaire asks:
- Your real name, address, email and phone number;
- Company name and company information;
- Collection name;
- Collection project description;
- Community channels related to your collection;
- Website related to your collection.
2. Provide proof that the collection is original and owned by you.
3. Verify your identity with visual ID verification.
4. Sign a collaboration agreement.
Also, according to an admin, (with whom I held a Q&A with which can be found at the bottom of this article), a website and a whitepaper are required. This does not seem to be a hard requirement though, since the casino game that we have already mentioned does not have a website, and the whitepaper is close to non-existent.
I think we must conclude here that verification is a manual process that can include human errors. Alas, it happens to the best of us.
Now let’s take a look at the requirements of the AtomicHub for project whitelisting.
1) Use a unique name for the collection
2) The collection must be original and of high quality
3) Have a community
Atomic requires you to have at least 150+ social media followers.
4) Follow the theme of the collection.
This implies, for example, that if you make a collection related to animal art, but then abruptly add robot art, then your collection can be removed from the whitelist, as this is considered an abrupt change in the theme of the collection.
5) Write a meaningful description, including information about the creator/performer.
6) Add links to social networks.
7) Do not spam your collection, distribute them to the wallets of the owners without any manifestation of interest on their part.
You also need to pass requirements like:
Identification
Each collection owner must complete the KYC procedure.
Proof of originality
Provide screen recordings/screenshots of working project files (Photoshop, Blender, Maya, After Effects, Premiere, Final Cut, etc.) and/or original project files (.mb, .blend, .ai, .psd, .json, and etc.).
Business Verification*
All legal information about the company (address, full name, business ID) must be publicly available on your website.
Proof of game*
Provide a demo showing at least the following:
a) Login to the wallet (Cloud-Wallet, Anchor)
b) A list of gaming NFTs that the user has in their wallet, as shown in the frontend.
c) Minimal interaction with your own smart contracts
* Applies only to games and more complex projects with staking features.
Everything described above is only the first level of verification. There is also a second level that is only issued to companies that show a serious track record. This is to let users of AtomiсHub know that they really are dealing with the original authors of the collection. One example is FGL. At the end of the article there will be a Q&A with an FGL staff member.
Summary
I would like to note that not every suspicious-looking project is a true scam. Sometimes it’s just a frivolous approach of people who are new to the blockchain sphere, or ignorant to the correct processes.
It took me several days to write this article and in the meantime “Own Wax Casino” continues to be active. Moreover, they posted various screenshots from their game, which may convince more people of their trustworthiness.
Beware, even when a project looks very nice and promising, it can still turn out to be an outright scam, such as CryptoGuards. Another example is the recent situation with WarSpace, where it turned out that the developers were already working on other projects in parallel without filling the promises they made on their main game.
I started writing this article with the idea that everything is very obvious and it’s very easy to recognise a scam. But the reality is that the recent gold rush into crypto and NFT projects has caused a wildspread of scams. If there is quick money to be made, scammers will go very far to assure everything looks legit. And then when you have a big chunk of your money invested in the project, you realise all too late that you’re the victim of a rugpull.
Invest wisely, always think ahead, do some research and do not blindly follow the advice of even the most trusted insiders.
Investing without even fact-checking the information that was handed to you on a silver platter, you run the risk of being left with worthless assets if scammers get the upper hand.
Thank you for taking the time to read about my experiences. I hope you will take my advice to heart, so we can all contribute to making the WAX community a safer place for new investors.
Bonus
As a bonus, I put together a small Q & A with the authors of some projects in order to understand how much work they put into it. The staff from NeftyBlocks were also kind enough to answer some questions to better understand their services.
Aston Martine, community manager of the Cosmic Clash project:
Q: How much time did you spend creating the whitepaper and your website? How many employees were involved in this? I just want to understand if one or two people can create something like this?
A: We started development of Cosmic Clash around September, and we started working on the white paper shortly after, so I think that was in October or early November. Basically as soon as we had a good feeling of the core mechanics of the game we started to put it all into writing for the white paper. Since Roger is a programmer and I am a game designer we did not need to hire any external resources for this phase of the project. It only cost us a lot of hours. The white paper was finished in January, after several rewrites and iterations.
Q: Was it hard to get whitelisted on AtomicHub?
A: Roger did the whitelisted process so I am not sure exactly how long it took. The AH people are very busy, so it can take a while, but when you have all your documentation In order you make their job easier, so then you also get whitelisted easier.
Q: Was it hard to get verificated on AtomicHub?
A: We got through the process relatively quickly, but that’s also because we are an established company with a good track record. FGL has been around for 15 years so it was easier for us to show all the paperwork. I can imagine it takes a bit longer for a new team. I have heard teams where it takes several weeks or months.
As you can see, for serious projectsthe whitepaper can take a huge amount of time to write. However, it does not have to require any external resources.
Chris, from the Neftyblocks team:
Q: Were there cases when people directly contacted the administration and offered money for verification?
A: No, or we force them to go through the verification process anyway. Sometimes the process takes longer than expected. But we have our requirements. And money will not help in solving this issue.
Q: Do you think it would be wise to limit the ability to purchase unverified collections from an account that has been created a few weeks ago, so that people who are new to NFT cannot lose their money on obvious fraud?
A: This is a tough question. Some collections don’t want to hurt anyone. But scam is a serious problem at the moment, so if you find suspicious projects, we immediately blacklist the collection and conduct a comprehensive check.
Q: Is a website/whitepaper required for a project to be approved?
A: Yes.
Q: What are your personal thoughts on situations when people get scammed by projects that didn’t even get verified on nefty/atomic, maybe you can give us some advise how not to get scammed?
A: Personally, It absolutely sucks when anyone gets scammed. When we purchase from a project its for a goal. Perhsaps we like the art, or are interested in their game. To find out, someone just stole money is irrating. We can give more warnings of what to look out for. But the scammers will get better. I also wanted to purchase a project from the Eth BlockChain and scammers were making fake NFT’s and they duplicated the real site. I also remember asking for access to test a game a project was building. I was able to find out they we’re legimate. But we may not be able to do that for every project that comes by. So we will lose some battles. But some we will catch them.
There was even another time when a person purposely got a project Blacklisted. And we found out we were weaponised against a legitimate project. We immediately reversed our actions.
