Scammers are likely to use excitement around the Ethereum Merge to launch new scams aimed at newbie crypto users, PolySwam CEO Steve Bassi has warned
The Ethereum Merge is expected to take place within the next 24 hours.
Speaking to Cointelegraph, Steve Bassi, founder, and CEO of PolySwarm said these scams could come in the form of fake ETH 2.0 tokens, fraudulent mining pools, and fake airdrops.
PolySwam is a decentralized cybersecurity marketplace that connects cybersecurity experts to projects and companies through the use of bounties.
Fraudulent staking pools
The Ethereum upgrade marks the transition from the current proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS).
Bassi said that for many Ether (ETH) holders, joining a staking pool will be their only way of reaping yield from staking rewards if they don’t have the 32 ETH required to become an independent validator.
“Staking is a pretty new concept for most of the crypto community and unless you’ve got 32 ETH lying around you’re going to have to join one of the staking pools to make a yield off your ETH.”
Bassi however warned that pooled staking providers “carry their own risk” as it often requires users to deposit and give up control of their ETH.
Bassi said that upstart staking providers, which “may offer very attractive terms” could perform “sudden rug pulls” that would affect those participating in the pool.
“This risk exists today with DeFi platforms/pools and tokens, but the Merge will give scammers a new character universe to work with.”
One of the more imminent threats involves scammers attempting to trick users into signing fraudulent transactions or parting with their private keys under the guise of migrating to the new Ethereum chain.
Bassi reiterated that the upgrade to proof-of-stake should be transparent, and a user should not need to do anything to migrate or preserve their ETH-based tokens, noting:
“We’ll likely see scammers try to get users to sign fraudulent transactions and/or leak private keys based on some false pretense that the user needs to do something to migrate chains.”
Another likely attack vector will come in the form of “fake airdrops,” added Bassi — convincing users to sign transaction messages or visit phishing sites in order to receive a bogus airdrop.
“The ETH Merge will be a good excuse for these scammers to masquerade as well-known, economically valuable, projects promising airdrops.”
“Those airdrops will likely redirect users to a phishing site where they may be fleeced out of their ETH, private keys, and/or crafted transaction signing attempts.”
The Ethereum Foundation has called the upcoming Merge the “most significant upgrade in the history of Ethereum” and has urged users to be on “high alert” for scams trying to take advantage of users during the transition. It has repeatedly warned there is no such thing as an ETH2 or ETH 2.0 coin.
The upgrade is expected by most onlookers to be a success, given the experience in the previous testnets, however, Bassi said there could still be a chance that scammers or hackers have found a way to game the system.
“We don’t really know if a group of scammers/hackers out there has already developed an attack or DDoS technique against the chain which can be used post-Merge when ETH 2.0 has the full economic value of ETH 1.0 moved over.”
“If there were such an attack it’s likely to only temporarily affect the chain and, possibly, the market as there a lot of smart eyes watching behavior post-Merge. However, an attacker will likely be looking for the opportunity to monetize any discoveries.”