Thread by @birdabioma

(🧵) A Crypto Community Manual on Red Flags 🚩 and Good Financial Hygiene 🧼! Highlights, pointers, and quotables, and highlights from today's #ProofOfCommunity space with @ADAOcommunity.

twitter.com/i/spaces/1ynKO…

(H/t to all speakers cited! Highly paraphrased for concision):

1-1/ General guidance (⚓️)

⚓️ @SCATDAO: "My first question when potentially investing in any asset: Does this project's idea make sense?"

⚓️ @BullishDumpling: "Even if I see red flags and other warning signs, I don’t instantly think 'scam,' it just heightens my caution."

1-2/ (⚓️)

⚓️ @AILovetru: "In crypto there is no customer service. One wrong move COULD be catastrophic."

⚓️ @NilsCodes (Nils): "Though we are trying to get away from traditional finance, that doesn't mean TradFi didn't come up with good concepts on how to keep things safe."

1-3/ (⚓️)

⚓️ Nils: "Before you FOMO into a project, count to 10. By '10,' I really mean wait 24 hours. The next day, ask yourself: 'Do I still really like this project?' If you could live without it for 24 hours, your probably could for 48 hours, or a week, or at all."

2-1/ On Security (🔐)

🔐 @theuttermost (David King): "Everything you do in crypto apps and platforms is a security vector (a point of entry for hackers)."

🔐 Nils: "Have at least 2 wallets, and at least one of those should be a hardware wallet. That is your savings account."

2-2/ (🔐)

🔐 King: "Many people in crypto save their seed phrases and spending passwords as text files. DON'T. Some hackers are scanning computers and public cloud locations exactly for these kinds of files. For God's sake, get a hard wallet if you have anything of value."

3-1/ Red Flags, General (🚩🌎)

🚩🌎 Dumpling: "It should ring alarm bells for you if a project’s team
(1) makes big promises, coupled with arrogance (esp in a community space as humble as Cardano's),
(2) becomes defensive when asked challenging questions,
...

3-2/ (🚩🌎)

...
(3) attempts to know answers to all questions (esp true for early stage projects), or
(4) censors and labels community members that raise valid and poignant concerns (e.g. readily labels member comments/quesitons as FUD, rumors, etc.)"

3-3/ (🚩🌎)

🚩🌎 SCATDAO: "First red flag: if its whitepaper or website makes no sense, it hardly matters how well the project performs otherwise."

🚩🌎 King: "The problem the project is trying to solve should be clear. If it’s all complicated jargon, it’s purely marketing."

4-1/ Red Flags, DeFi (🚩💸)

🚩💸 Dumpling: "If a project says 'steady lads, deploying capital' or 'have fun staying poor,' it’s very likely a scam."

🚩💸 Nils: "If they promise huge yields, it’s not a red flag, but still: they are likely leveraging the shit out of your funds."

4-2/(🚩💸)

🚩💸 SCATDAO: "Any project team should have the courage to say 'I don’t know' or 'I can't answer that off the top of my head, but I will talk to my dev and get back to you.'"

4-3/(🚩💸)

🚩💸 @N8iveToEarth (Riley): "Whenever signing a transaction on a DeFi project that builds a transaction for you (especially for a wallet like Nami), always hit the 'More Details' button. Verify that you’re not being scammed very badly."

5-1/ On Rug Pulls, NFT projects (🚩👾)

🚩👾 King: "We all started in crypto having exposure to (and likely falling for) moonboi culture: 'lambos,' 'wen moon,' hyperinflated Twitter/Discord followings, influencer shilling. These aren't all scams, but they tend to not succeed."

5-2/ (🚩👾)

🚩👾 King: "I oftentimes wonder, especially for NFT projects, why people so easily fall for projects that blatantly look like scams. Watch for these indicators and don’t be taken advantage of!"

6-1/ On Doing Your Own Research (🔎)

🔎 Nils: "When buying new headphones, you compare and contrast: Headphone specs? Most known brands? Apply the same in crypto."

🔎 David: "Use your chain’s Explorer to verify that there are smart contracts live and active for that project."

7-1/ Growth areas (🌱)

🌱 @Welikethetrees (TCT), King: "Coming from Ethereum, you could see the Solidity code in the Explorer. It was only byte code in Cardano, not Haskell. That was actually a big shock. Implementing that would be an extra element of transparency and safety."

7-2/ (🌱)

🌱SCATDAO: "We are creating tools to help people learning to do their own research. These are works-in-progress, so our hope beyond providing basic research metrics is that we generate more diverse consensus on what is important to people's research."

7-3/ (🌱)

🌱SCATDAO: "There are projects whose impact is not necessarily code-based, but DAO-based. These projects can help themselves can show that they are putting these funds in a multi-sig wallet, even before any code is written or fundraising is completed."

8-1/ Some comic relief (🥁)

🥁 SCATDAO: "Put the word 'decentralized' in front of anything, that project will raise $100M. But does the project really make sense? A project could decentralize laundry services, but why?"

8-2/ (🥁)

🥁 Nils: "Remember: if you purchase underwear and are wearing it, you can't return it."

🥁 All: "Remember: it’s Dumpling, NOT Bullish!"

(/end thread 🧵)

Thanks again to everyone in the space! This is great advice for newbies, and great reminders for us all.