The cryptocurrency boom of 2020 has seen a surge in the popularity of decentralized finance (DeFi) protocols. DeFi protocols are designed to provide users with access to various financial services, including lending and borrowing, without the need for a centralized intermediary.
However, the success of a DeFi protocol is by no means guaranteed. In the past few years, we have seen a number of DeFi protocols fail. This article will examine two such protocols, namely RING Financial and GetGems (GEMZ). We will look at the reasons behind their failure and the impact it had. We will also try to understand if RING Financial was a scam or a fraud. Finally, we will also try to learn from their mistakes.
What is RING Financial?
RING Financial was a decentralized finance (DeFi) protocol. The protocol was designed to provide users with different aggregated DeFi protocols. The protocol was built on Binance Smart Chain and had its own native token, the RING Financial Token
Through innovation, RING seeks to advance the field of passive income production. In other words, RING Financial is building a multi-chain Yield Processing Node to make DeFi available to everyone. Unfortunately, a hacking attempt caused the platform to crash.
What is GetGems (GEMZ)?
GetGems (GEMZ) was launched in 2015 by Daniel Peled and aimed to be a social messaging app that allowed people to send and receive Bitcoin.
Its price hit a high of $0.0579 in May 2017 according to CoinMarketCap data, before the coin stopped trading completely.
The Reasons Behind the Failure of RING Financial
The failure of RING Financial was caused due to a breach in Smart contract. This made it easy for the hacker to exploit the contract and emptied the liquidity pool of the token. This resulted in accusing RING Financial of scam.
The Reasons Behind the Failure of GetGems (GEMZ)
The downfall of GetGems (GEMZ) is due to various reasons. People believed in the project, but the team behind it failed to deliver. Some of the reasons behind the failure of GetGems (GEMZ) include:
- Lack of a clear business plan
- Lack of traction
- Unethical behavior
- Security issues
- Unclear progression paths
Additionally, the platform was not able to keep up with the changing market demands, which led to its eventual demise.
RING Financial and GetGems hacks: could they have been prevented?
The GetGems hack and RING Financial hack could have been prevented, if the Binacne Smart Chain Contract wasn’t vulnerable to a hack. Due to the unfortunate circumstance,RING Financial was widely accused of being a rug pull.
Hacker took advantage of the flow in the smart contract and drained the liquidity pool in just 5 minutes. The RING Financial team ended up redeploying a second contract but at the time it was already too late.
The Impact of the Failure of RING Financial and GetGems (GEMZ)
The failure of RING Financial and GetGems (GEMZ) was widely discussed in the DeFi space. Both protocols were heavily advertised and had a lot of hype around them. As such, their failure caused significant losses for token holders and users.
In addition, the failure of the two protocols had a negative impact on the overall sentiment in the DeFi space. It caused token holders to become wary of buying other DeFi protocols. This had a negative impact on the growth of the DeFi space.
Was it Right to Accuse RING Financial and GetGems of scam or fraud?
This question is one of the most frequently asked questions when it comes to RING Financial.
In reality, RING Financial was not a scam or a fraud. We have seen in this article, the reasons for the failure of this DeFi.
If performing a rug pull i.e. scam was the goal, there is still a respectable amount of liquidity in the pool. The value in the pool is determined by the price of the BNB token because the pool is made up of RING/ BNB, therefore the amount varies. According to the BNB pricing of 332.61$, there are 784.67BNB in the LP as of February 5 at 6:30 AM, which is equal to 261,047$.
Lessons Learned from the Failure of RING Financial and GetGems (GEMZ)
The failure of RING Financial and GetGems (GEMZ) serves as an important lesson for the DeFi space. It highlights the importance of Implementing high security measures of Smart contracts.
DeFi protocols should ensure that their platforms are secure and have robust risk management mechanisms in place. They should also ensure that their tokens are not subject to excessive price manipulation and volatility.
In addition, DeFi protocols should have experienced teams with a strong understanding of the financial sector. This will ensure that the protocols are properly managed and protected from fraudulent activities.
Finally, DeFi protocols should ensure that they are transparent with their operations. This will help to build trust with their users and ensure that their funds are properly managed and protected.
The Failure of RING Financial and GetGems (GEMZ) : Key points to remember
In conclusion, the failure of RING Financial and GetGems (GEMZ) serves as a reminder of hacks associated with Smart contracts. It is important for noders to understand these risks and take the necessary steps to protect their purchased tokens.
At the same time, it is important for DeFi protocols to take the necessary steps to ensure their security and protect their users. This includes implementing robust security measures, risk management measures, experienced teams, and transparency.
Finally, it is important for noders to exercise caution when purchases tokens in DeFi protocols. Let’s just remember that RING Financial was not a scam, but that a hacker took advantage of the Smart contract’s vulnerability to carry out frauds and scams.
