PANews, July 15 news, Binance issued an important risk warning regarding Binance Alpha, stating that it has recently noticed some suspicious activities aimed at profiting from users providing liquidity for DEX. Common risk signals include: abnormally high returns, rapid price fluctuations, or excessive promotion of trading activities and incentives. A common strategy is to attract users to provide liquidity through trading rebates or similar incentive mechanisms. These mechanisms can simulate a positive market environment and active trading, but often obscure significant structural risks and potential sudden price reversals.
For the above reasons, it is strongly advised that users pay attention to the following points: 1. For liquidity pool (LP) providers: Before adding liquidity, please carefully evaluate the project's market capitalization, fully diluted valuation (FDV), and price volatility. Choose your liquidity range wisely, as providing liquidity carries risks including impermanent loss. Be particularly wary of abnormally high LP returns in low liquidity environments. 2. For traders: Before trading, understand the token's liquidity and holder distribution. Maintain a high level of vigilance towards tokens that show concentrated holdings or sudden price increases without obvious reasons. Pay attention to liquidity changes, token distribution, and trading patterns. Stay informed and make decisions based on research rather than speculation. 3. Risk warning banners: For projects with higher risks, Binance will display risk warning banners on the token trading page (e.g., BR, KOGE, QUQ). Please pay attention to such risk warnings before trading.
