An estimated 89% of DEX pools associated with potential pump-and-dump schemes appear to be exploited by the address that originally created the pool. The other 11% are likely rugged by addresses financially supported by the pool creator or token deployer. In certain cases, the same funding source appears to have backed both the pool creator and the exploiter, indicating potential coordination in targeting users, according to a new study.

Once a DEX pool is launched, the associated token is usually abandoned within a timeframe ranging from a few days to a few months. On average, this process takes about six to seven days, though 1% of suspected pump-and-dump schemes persist for up to four to five months, Chainalysis latest report shared with CryptoPotato revealed.

More than 3 million tokens were created in the blockchain ecosystem in 2024, and around 1.29 million of them, representing 42.54%, were listed on a decentralized exchange.

Only 1.7% of 2024 Tokens Actively Traded

Ethereum dominated token creation last year, primarily because of the ease provided by the ERC-20 standard. Despite Ethereum maintaining its position as the blockchain with the most tokens traded on DEXs, Chainalysis observed significant activity on chains like BNB and Base. In 2024, several hundred thousand tokens were launched monthly on these chains, with July surpassing 400,000 releases.

Although the year saw an enormous number of token launches, Chainaysis found that just 1.7% have been actively traded in the last month. This raises the question of why there are so many dormant tokens. The blockchain analysis firm hinted that one reason might be that they were abandoned shortly after launch due to insufficient interest or failure to achieve adoption.

On the other hand, some could be part of deliberate short-term schemes, capitalizing on early hype before disappearing, such as pump-and-dump strategies or rug pulls.

Wash Trading Exposed: $2.57B in Activity

Wash trading, like pump-and-dump schemes, is yet another widespread type of market manipulation within the digital asset industry. Chainalysis utilized two heuristic approaches, each employing unique methodologies, to detect various wash trading strategies and identified approximately $2.57 billion in possible activity.

The report explained that the majority of academic studies on wash trading in the crypto space have primarily concentrated on centralized exchanges (CEXs), where motives often include boosting trade volumes to attract users or improve leaderboard rankings. Contrastingly, wash trading on decentralized exchanges (DEXs) involves gas fees, making it potentially costlier, though it continues to occur.

Concerns over wash trading have heightened among regulators and law enforcement. On October 9 last year, the US Securities and Exchange Commission (SEC) filed charges against four market makers ZM Quant, Gorbit, CLS Global, and MyTrade for artificially inflating token trade volumes. The Internal Revenue Service (IRS) later uncovered that the scheme involved 18 participants and organizations with ties to the UK and Portugal in an international trading operation.