As decentralized finance continues to grow at a rapid pace, the ability for users to properly evaluate smart contracts and assess risks has become critically important. Due to the complexity of blockchain technology and the potential for bad actors, even experienced users can struggle to properly vet projects. This is where tools like DEXTools aim to provide value by integrating smart contract auditing services. However, some have questioned whether DEXTools’ services accurately promote safety.
To evaluate this debate objectively and provide users with a balanced perspective, it is important to examine the nuances of DEXToolsApp’s model and the challenges inherent in review tools. This article provides a balanced look.
Let’s separate fact from fiction.
We’re in the DeFi
Let’s start by thinking about what decentralized finance is:
“ A rapidly evolving ecosystem that leverages blockchain technology to create open, permissionless, and transparent financial systems.”
I’d like to remind some of the core principles that are commonly associated with decentralized finance:
- Decentralization: DeFi systems aim to remove intermediaries and central authorities by leveraging decentralized networks like blockchain. This decentralization ensures that no single entity has complete control over the financial system.
- Permissionless: DeFi protocols are permissionless, meaning that users can participate without seeking approval from any central authority. Anyone can interact with DeFi applications, create smart contracts, lend, borrow, trade, and more, without needing to go through a gatekeeper.
- Transparency: DeFi systems prioritize transparency by recording transactions and financial activities on a public blockchain. This enables users to view and verify transactions, balances, and smart contract codes, enhancing trust and reducing the potential for fraudulent activities.
- User Control: DeFi emphasizes giving users full control over their funds. Users typically hold their private keys, which grant them ownership and control over their assets.
It is important to understand the context in which a platform like DEXTools operates, which provides essential services and tools for users exploring this world, particularly DeFi tokens trading. DEXTools aims to provide services that respect the core principles and values of the decentralized finance sector. It started as a charting and trading platform for projects on Ethereum that were still in their early stages and could not be viewed on more established centralized exchanges.
What does this mean?
Whenever a new token is created and liquidity is added to a trading pair, DEXTools tracks and lists that token on its platform. This process adheres to the principles mentioned above by remaining open and permissionless. If a project is identified as malicious, DEXTools inserts a tag that warns each user of the dangers associated with this project.
Should DEXTools operate differently, selectively choosing which and when to list various projects?
That would make it operate more like a centralized platform, going against its purpose. For comparison, how many projects are listed daily on centralized exchanges like Binance? Realistically it’s zero to one or two per month as they conduct thorough due diligence.
Now consider DEXTools – how many projects are launched each day, especially during hot market phases? It can be hundreds or thousands.
Just imagine manually analyzing every contract and conducting the necessary due diligence to avoid issues at that scale. That level of centralized control and manual screening would simply not be feasible, and it would prevent DEXTools from respecting the decentralized nature of the sector it aims to serve. An open and permissionless model is required to keep up with the pace of innovation in DeFi.
The Diverse Range of Audit Service Providers
DEXToolsApp collaborates directly with established audit and security firms like QuickIntel, TokenSniffer, GoPlus Security, and Hapi to conduct various levels of smart contract analysis on the projects listed. On the surface, integrating these reputable services adds an extra protection layer for users by automating some screening steps.
However, it’s also inaccurate to assume that any automated checks can replace the need for exhaustive due diligence made by users who would like to invest in certain projects. The platform’s commitment to security is evident through these partnerships.
Always Do Your Research
While DEXTools collaborates with reputable auditing partners, users need to continue exercising due diligence on any project, even those displaying a green audit status.
Due to API call rate limiting, new data can’t show immediately on DEXTools, which means audit results may not update instantly on the platform.
To get the most up-to-date information, clicking the audit provider’s logo will direct you to their official report on their site. QuickIntel provides a more in-depth look at contract details beyond what typical audits entail.
To get a more complete picture, it is always necessary to cross-check multiple sources. At the end of the day, “green audit” should not be taken as an endorsement. Continued self-research using tools like QuickIntel, official documentation, and forums is still necessary for assessing risk.
The complex and evolving nature of DeFi means vigilance is key. DEXTools’ aim is harm reduction through transparency, not a guarantee. Traders must do their research and only trade amounts they can stand to lose.
The Ongoing Battle Against Scammers and The Impracticality of Manual Vetting
In the ever-evolving crypto landscape, bad actors continuously adapt to circumvent detection. Even the best auditors may need to refine their methods as scammers uncover new loopholes. This poses a challenge for platforms like DEXToolsApp, which strives to maintain a secure environment for users.
Additionally, imagine if users had to manually vet every smart contract, it would be impractically time-consuming and most of them would not be able to do it.
Here, DEXToolsApp steps in to fill the gap by providing users with automated auditing services. This not only saves time but also ensures a certain level of accuracy in the evaluation of contracts.
No tool or audit can ever guarantee 100% safety. Independent assessment and an understanding of inherent risks remain the responsibilities of each user. With prudent use alongside one’s research, interfaces integrating multiple auditors can help manage those risks. DEXToolsApp aims to provide users with the tools they need to make informed decisions, but it’s crucial to remember that no platform can eliminate all risks.
Ultimately, the goal should be harm prevention, not fault-finding. So long as its services are offered in good faith, we should be careful not to dismiss the work of any provider simply due to the innovative means bad actors may find to operate against our collective interests.
Conclusion
In conclusion, DEXToolsApp is an essential tool in the crypto world, providing a comprehensive contract review experience through its collaboration with reputable audit service providers. While no platform can guarantee 100% safety, DEXToolsApp’s commitment to harm prevention is evident. Users must remain vigilant, conduct their research, and trade responsibly to navigate the complex world of cryptocurrency.
Useful Links:
Price/Earnings DEXT Valuation Sheet
Quantitative Analysis of the DEXTools Deflationary Model
The Burn Dashboard
Article written by Pierandrea Cecconi (@PierArmy), Project Development Blockchain Army
