Hackernoon logoYou could lose millions on EtherDelta with this simple mistake! by@vamshi

You could lose millions on EtherDelta with this simple mistake!

Vamshi @ BearTax Hacker Noon profile picture

@vamshiVamshi @ BearTax

Co-founder of BearTax

EtherDelta is well known as a decentralized exchange, where you can trade directly using metamask without trusting a third party to hold your funds. However, you might be at risk of losing funds by trading deprecated coins, invalid coins on this platform. So beware.

Don’t jump blindly to trade something. Do your own research. Photo by Debora Cardenas on Unsplash

Etherdelta is a decentralized trading platform for Ethereum based tokens, could be ERC20 or ERC223. This platform allows you to trade directly from your wallet without involving a third party exchange to hold your funds. This is well built system as per the rules of the digital era, which stresses in the point to trust no one and yet everything should work like a charm. So ED is such a trustless platform, in fact, it’s the most popular and widely used DApp (decentralized application)on Ethereum platform.

Even though EtherDelta is a decentralized exchange, there are people who will vet the coins to be listed/named to be available pairs on ED. There’s also a way to trade a token without being listed officially by using their contract address.

So, if a particular coin is an ERC20 token and unlocked/available in wallets, it’s automatically tradable on decentralized exchanges. This brings a problem with it. Which might seem simple for experienced traders, but beginners might go rekt with this.

There will be few coins, which could have been reissued due to a hack or upgraded to a different protocol (say ERC223 like COSS.IO), which will leave the old coins useless. In such case, because it was a legitimate project, ED would have named and allowed the trading of COSS previously.

Exchanges are not removing or delisting when this upgrade happens, which in-turn is allowing those useless tokens to be traded on official pairs. COSS_ETH is one such instance. It used to trade at 60K WEI and suddenly started trading for 5K-9K WEI.

I was shocked and dug deeper into its root cause, which has led me to an update that COSS team has released a month ago. The COSS team has upgraded their coins to ERC223 standard and all the previously bought coins were swapped with the new ones. This doesn’t stop anyone from buying the old standard coins on ED who will end up holding nothing more than worthless coins. Thus the cause of a huge decline in price.

So next time you see a worthy coin going south, make sure to do your research on these things before bagging up worthless coins and spending your ether on nothing!

Stay Safe & Trade Safe in Decentralized World

Thanks for reading through this. Hope you find this informational. For more informational content on Blockchain technology and Cryptocurrency, follow me on Twitter and Medium.

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