54% of Ethereum tokens show pump-and-dump traits: Report

• Over half of ERC-20 tokens launched in 2023 showed patterns of scams.
• Interactions with these scam tokens have been kept under 2%.

Ethereum [ETH] is the largest decentralized finance (DeFi) platform globally. It hosts numerous platforms that leverage the ERC-20 token standard for launching tokens.

However, recent reports show that some of the tokens traded on decentralized exchanges (DEXs) exhibit characteristics associated with pump-and-dump.

Ethereum sees pump-and-dump tokens

A report by Chainalysis showed that among the Ethereum-based tokens introduced to decentralized exchanges (DEXs) in 2023, 54% exhibited patterns of pump-and-dump.

The study analyzed over 160,000 tokens available for trading on DEXs in 2023. It was found that pump-and-dump tokens collectively generated $241.6 million in profit.

On average, each token contributed around $2,500 to this profit, and most dumps happened in the first weeks of launch. 

Despite the prevalence of tokens showing signs of potential scams, they constituted only 1.3% of the overall DEX trading volume.

Analyzing the Ethereum volume and TVL

An examination of Ethereum’s data on DefiLlama showed it continued to dominate the decentralized finance (DeFi) space.

Ethereum maintains the highest Total Value Locked (TVL) among all DeFi platforms and consistently records substantial daily trading volumes. As of the current moment, its TVL was about $32 billion.

Source: DefiLlama

Analyzing the TVL trend showed that Ethereum peaked with a volume of $106 billion in 2021 before experiencing a notable decline.

Additionally, an assessment of the daily volume showed it to be around $1.4 billion in the last 24 hours. The volume has consistently exceeded $1 billion recently, with the lowest recorded volume for the year at around $678 million.

Comparing the daily trading volume with the total profit generated from pump-and-dump schemes reaffirms that such scams represent only a small fraction of the overall trading volume on the Ethereum network.

ETH sees resistance at this level

As per CoinMarketCap data, Ethereum continues to hold its position as the second-largest asset in market capitalization, boasting over $278 billion.

Source: Trading View

 Realistic or not, here’s ETH’s market cap in BTC terms

As of this writing, Ethereum was trading at around $2,300, showing a slight increase of about 0.4%. This marked the second consecutive increase and shows an effort toward recovery.

However, it’s worth noting that Ethereum’s short Moving Average (yellow line) remained a point of resistance, influencing its current trading dynamics as of this writing.