Crypto Scams Survey 2022 | BanklessDAO Weekly Rollup

Catch Up With What Happened This Week in BanklessDAO

Feb 25

Dear Bankless Nation 🏴,

It’s already two weeks into Season 7, and the season’s first New Joiners Session was held this week. Bankless Academy has partnered with Optimism to launch a new lesson on Layer 2 blockchains, and the Decentralized Arts team dropped another wonderful NFT artwork. There are so many ways to get involved and support the bDAO mission through education, media, and culture.

In this week's editorial, read the insights from InfoSec’s 2022 survey about crypto scams. It’s an important look at the current state and could set the scene for some further research and innovation around protection and education for crypto holders.

Our thoughts are with the victims of the tragic 7.8 magnitude earthquake in Turkey. BanklessDAO has been working to find a way that can help provide some relief to these victims, and fortunately, plans are underway. Tune in to the Amphitheater on Monday for an update on the situation, and please consider donating if you can.

BanklessDAO is a team; and in tough times it’s evident that there are real bonds of friendship throughout our DAO community. To quote William Butler Yeats, “There are no strangers here; Only friends you haven't yet met.” Have a wonderful weekend.

Contributors: twoeggs, ab_colours, anointingthompson1.eth, Lucent1, KingIBK, theconfusedcoin, Austin Foss, Yofi A., Allyn Bryce, WinVerse, links, siddhearta, Trewkat, HiroKennelly

This is an official newsletter of BanklessDAO. To unsubscribe, edit your settings.

✅ Action Items

☑️ Vote: Head over to Snapshot and vote on bDIP-07.

📖 Read or listen to the incredible range of content produced by teams in the DAO.

👨‍🎓 Learn something new at the Education Department’s How To sessions this week.

🏃‍♀️ Catch up: Review this week's Community Call notes.

🏛 Governance

Snapshot Votes

🗓️ bDIP-07: Set Season Length at 16 Weeks With Designated Downtime

Resulting from the confusion around the Season 6 to 7 transition, bDIP-07 is a proposed solution to prevent similar mistakes. This bDIP proposes a change to our Constitution defining a season as “funding cycles (each set at 16 weeks)” instead of the current wording which states seasons are “funding cycles (typically 3 months)”.

Along with the above mentioned changes to the Constitution the proposal specifies dates for the rest of 2023 and a fixed set of dates applicable each year from 2024:

Proposed Season Dates for 2023 (Seasons 8 and 9)
Season 8: Mon, May 15 - Sun, August 27 (15 weeks)
Gap Week: Mon, August 28 - Sun, Sept 3 (1 week)
Season 9: Mon, Sept 4 - Sun, Dec 17 (15 weeks)
Annual Break: Mon, Dec 18 2023- Mon, January 1 2024 (15 days)
Season Dates for 2024 (applicable each subsequent year also)
Season 10: Tues January 2 - Mon April 22 (16 weeks)
Gap Week: Tues April 23 - Mon April 29 (1 week)
Season 11: Tues April 30 - Mon Aug 19 (16 weeks) - Week 1 would incorporate bDAO anniversary
Gap Week: Tues Aug 20 - Mon Aug 26 (1 week)
Season 12: Tues Aug 27 - Mon Dec 16 (16 weeks)
Annual Break: Tues Dec 17 - Wed January 1 2025 (16 days)
2025 seasons begin on Thurs Jan 2.
2026 seasons begin on Fri Jan 2.
… and so on.

Additional detail may be found in the proposal text. Voting for bDIP-07 will close on March 3 at 17:00 UTC.

Proposals in Discussion

💰 BanklessDAO: Quadratic Matching Round Pilot

Securing long-term DAO funding has become a common topic of discussion. As one possible way to assist achieving that goal, this grants funding proposal “… suggests piloting a gated BanklessDAO quadratic matching round…”. Quadratic funding (QF) is a method of raising funds for public goods and is the method popularized by, Gitcoin. Learn more about QF here.

For this pilot project, 1,000,000 BANK would be used as a matching pool in S7, and an additional 100,000 BANK allocated for compensation within the working group. Using Gitcoin’s Grants Stack anyone can now independently create their own matching rounds without applying for Gitcoin’s matching rounds.

The team’s expected results are:

Test Gitcoin Grants Stack UI/UX.
Test BanklessDAO projects for early product market fit (PMF).
Attract external capital to BanklessDAO projects.
Attract media exposure for running one of the first pilots.

⚖️ [V2] Establish and Fund a Governance Department

Inspired by the weekly DAOstewards meetings held in the Amphitheater voice channel, Season 7 funding of 800,000 BANK for a Governance Department has been sought from the Grants Committee. Discussion for this funding proposal is a continuation of another from mid-January, and presents the following long term goals for a Governance Department team:

Clarify the mission of BanklessDAO.
Upgrade and maintain Governance tools.
Identify and implement a framework for mitigating governance attacks.
Maintain governance docs and Constitution.

Two sources of inspiration for the Department’s mission are Who Decides Who Decides?, and DAOistry. The aim is to “assure the DAO that decisions are made in a way which generates engagement and ownership over those decisions from the highest number of contributors.”

Crypto Scams Survey 2022

Author: twoeggs

Crypto users experience frequent and costly scams. According to a survey of crypto users by BanklessDAO, 66% of users report experiencing a scam and the average victim lost $2,900. This tracks closely with the U.S. Federal Trade Commission reporting in 2022 that the average crypto scam victim loses $2,600.

In comparison, 47% of U.S. consumers have been victims of credit card fraud (according to Mastercard). The big difference is that FTC regulations limit consumer losses to $50. Crypto users have no such protections. If crypto is to live up to its vision of being a better way to bank, it will have to find better ways to protect the crypto user community from scams.

Key Survey Findings

The BanklessDAO InfoSec team surveyed 354 crypto users in December 2022 and found that these users experience frequent and costly scams:

Attack frequency: 66% of users have experienced a crypto scam.
Loss frequency: 39% of users lost money due to a crypto scam (i.e. 66% reported being attacked but only 39% admitted to losing money due to a scam attack).
Loss cost: Crypto scams cost victims an average of $2,900.

The best predictor of scam loss is the number of transactions a user makes per year. Users who make more than 20 transactions a year are twice as likely to be scammed and ten times more likely to lose more than $500.

Phishing and fraud are the most common crypto scams. User experiences included:

Phishing Attack (46%) — the attacker impersonates a figure of authority to steal money.
Fraud Scams (32%) — a crypto project founder steals investor money.
Private Key Theft (9%) — a phishing attack to steal a crypto user’s wallet seed phrase.
Project Hack (9%) — a malicious programmer steals investor money from a project.

Web3 users want comprehensive anti-scam protection and are willing to pay for it.

Users want to be warned before interacting with known bad addresses and URLs (94%).
Respondents want real-time alerts of fraud and hacking attacks (92%).
Users want hacking and fraud risk ratings before making a crypto investment (88%).

Users were willing to pay an average of $6 per month for an anti-scam solution, with 23% of respondents willing to pay $15 or more per month.

Crypto User Characteristics

Forty-eight percent of respondents rated themselves as average in terms of crypto knowledge.

Ninety-four percent of respondents have purchased crypto tokens like Bitcoin or Ethereum.

Seventy-seven percent of respondents use the Ethereum blockchain.

Forty-six percent of respondents make more than 20 crypto transactions per year.

Coinbase is the most popular crypto wallet among respondents, followed by MetaMask (multiple answers were allowed).

Eighteen percent of respondents experienced more than one scam attack that resulted in losses.

Methodology and Lessons Learned

The survey was drafted by the BanklessDAO InfoSec Department, with input from the BanklessDAO Marketing, Research and Consulting teams.

In December 2022, the InfoSec team at BanklessDAO launched a Web3 User Safety survey for members and received 354 survey responses. Google Surveys was used. Following a spam attack on the response form, respondents were limited to one survey response and duplicate submissions were deleted. Responses were gathered from December 14 to 30, 2022. The survey was promoted to the BanklessDAO Discord community and on the BanklessDAO Twitter account.

Below are some of the lessons we learned about the survey process.

Including a POAP attracts scammers
Within minutes of the survey launch, a scammer built a bot to submit nearly 3,000 identical surveys within 15 minutes, each with a different wallet address to collect a free NFT (issued through poap.xyz) for completing the survey. The solution was to turn on security for the Google form that ensured each respondent could only submit one survey.
Respondents may be reluctant to admit to losses
It is not clear why 66% of respondents reported experiencing a crypto scam attack but only 39% admitted to losing money to a crypto scam. It may be that people are embarrassed to admit they lost money. If so, the overall losses may be skewed low. Were they attacked but lost no money and if so how did they avoid a loss? Are there other ways to solicit information about financial losses that would produce more complete results?
Effective survey promotion is critical
Although there are 35,000 members in the BanklessDAO Discord, only around 1,000 are visiting on a weekly basis. There are many competing priorities for DAO member time, including polls, surveys, forum discussions and votes. Breaking through the noise inside the DAO took a lot of effort and promotion at the DAO level (weekly call, weekly rollup) as well as at the Guild level (separate posts to each team).
Low activity protects users
This survey focused on factors which might influence likelihood of being scammed (chain used, wallet used, type of investment, number of transactions). The factor that seemed most associated with risk of being scammed was simply the number of transactions a user does per year. It could be useful to explore whether there are additional factors that help protect users from being scammed (e.g. using an anti-phishing product or using a wallet that checks for scam addresses).
Follow-up survey questions are needed
Which particular scams were most likely to cause losses? Which particular protections could best protect users from losses? What are the best ways to communicate risks to users?

Summary and Next Steps

The crypto community is evolving rapidly, yet it is clear that the current frequency of scams is a significant deterrent to attracting new users. Some approaches that could reduce the frequency and severity of scams include:

User education
Communities like BanklessDAO have an important role to play in upskilling users about risk and mitigation strategies.
Industry standards
It is critical for the industry to hold itself to higher disclosure standards that help reduce the incidence of founder fraud and hacks. Crypto needs its own decentralized version of GAAP accounting standards.
Anti-scam products
Products that protect users before, during, and after a crypto transaction could reduce the cost of scams to users. Wallet vendors could also expand their safety features to include more comprehensive protections for users.

Thank you to everyone who completed the survey! You can read more from the InfoSec Team in the Phishing School segment in this Weekly Rollup.

👀 In Case You Missed It

📺 Weekly Rollup Recap With Allyn Bryce

Give your eyeballs and earballs a a treat and relive the ride that was Relivin’ the Ride of Season 6. Find all the previous episodes on the BanklessDAO YouTube Channel.

🌱 New Joiner Session s7x01

The first New Joiners Session for the season took place on February 20, where new members had a fun time with knowledgeable bDAO contributors, learning about the community and having their questions answered. If you missed it, you can watch the session recording on YouTube.

🔮 Writers Guild AMA — Oracle Edition

This Oracle edition AMA was held on Twitter Spaces and hosted by WinVerse, who with Bruvton, Lucent and Austin discussed centralized and decentralized oracles, Maker Protocol’s Oracle Security Module (OSM) and UMA’s Optimistic Oracle. Listen to the recording and check out the DeFi Download Oracle Edition to learn more about oracles in DeFi.

💪🏻 AMA With Vertex Protocol

With the recent problems faced by users of centralised exchanges, shifting to decentralised alternatives has become even more important. In this week’s AMA we discussed this very issue with Vertex Protocol, a decentralised exchange built on Arbitrum. Let’s take back control!

🌐 The Africa Web3 Summit

Web3 Accra x Afropolitan: Africa Web3 Summit's panelists with Vitalik and the Ethereum Foundation.

The Africa Web3 Summit, organized by Web3accra and AfropolitanDAO, took place on 23-24 February, and this year's theme was "the network state." The event aimed to showcase all things related to the internet, new technologies, and how they can benefit Africa. The conference provided attendees with an opportunity to learn about blockchain, crypto, esports, NFTs, and the metaverse, all in one event.

Panelists represented leading web3 organizations including Zilliqa, Coinbase NFT, ArtsHelp, Ape In Records, Mazzuma, Bitsika, NVIDIA Africa, and Cointelegraph.

The event highlight was a surprise Guest of Honour appearance by the Ethereum cofounder, Vitalik Buterin, who is currently touring Africa. We’re not sure, but we think he fell over a blockchain and hurt his knee (😆 okay no, we have it on good authority from Miss Purple that he was running in Kenya and injured his knee there).

Bankless Africa and bDAO contributors Miss Purple (bottom left, owning the stage), thinkDecade (bottom right, rocking a DAOpunk), and Yofi A. (top left and top right, looking sharp) showed up to moderate and offer insights into the world of web3.

🎙 BanklessDAO Podcasts

🗓 Set A Reminder

🙏🏽 Update — Turkey Disaster Relief Fund

Following the tragic earthquakes in Turkey, BanklessDAO’s Turkish Media Node has created a Turkey disaster relief fund on Giveth.io to help victims. Individuals who donate to the campaign will receive Thrivecoin. Donate on Giveth.io or get more information in this Twitter thread.

DAO member raybankless.eth will provide an update on the situation in Turkey and the disaster relief efforts by Bankless Turkey in an AMA on Monday, February 27 at 20:00 UTC. This will be right after the Grants Committee call in the Amphitheater. To set a reminder, RSVP to the event.

🎁 Spect Network Demo

Spect is a highly customizable tool for DAO contributors to form circles (or sub-DAOs) that manage grants, bounties, and tasks. On Spect, it is also possible to send kudos (soulbound tokens) to contributors and reward contributors on multiple EVM networks using any token. Contributors can even distribute retroactive rewards among each other in a decentralized and fair way.

Join us for a demo of Spect Network, a tool that helps create advanced workflows for your DAO on Tuesday, February 28 at 19:30 UTC in the Amphitheater. To set a reminder, RSVP to the event.

🎁 Supercluster Labs Demo — Decentralized File Sharing

Supercluster files enable decentralized teams to share content between members — using web3 tools. To learn more about Supercluster Labs, join us for a demo on Thursday, March 2 at 17:00 UTC in the Amphitheater. To set a reminder, RSVP to the event.

👏 How To Coordinape

Coordinape is a platform that enables peers in the DAO to reward each other for their contributions in the previous month. Join Warrior on Tuesday, February 28 at 14:00 UTC in the watercooler voice channel to learn the basics of Coordinape. To set a reminder, RSVP to the event.

🎇 How To Sobol

Sobol is a web-based platform that provides flexibility for teams to govern themselves and run their organization according to their unique culture. If you want to know the organization of the DAO and how to find different information about roles, guilds, Notion pages, multi-sigs, and members of our community, join Oluwasijibomi in the watercooler voice channel on Thursday, March 2 at 14:00 UTC.

🛡️ How to Wallet/Security Knowledge Session

If you want to learn about how to be safe with respect to your web3 wallets, read on. Paulito will be conducting a How to Wallet /Security Knowledge Session on Tuesday, February 28 at 14:00 UTC. To set a reminder, RSVP to the event.

🎙️ BanklessDAO and WildfireDAO’s AMA Series

Season 1 of this AMA series was officially completed last week with Season 2 scheduled to launch in March. The first edition was a great success with big names like ENS Domains, Gitcoin and many others featuring. Season 2 will focus on fashion and music — two of the hottest sectors in web3 at the moment!

🔺 H.E.R DAO

This woman-focused developer DAO, committed to increasing diversity and inclusion in Web3, has today announced the launch of its first incubated company, HD Games. The collective will kick-off the new venture with a 24-hour Games Day Hack hackathon in collaboration with AIKON, to be held at ETHDenver, in Denver, Colorado on February 28 - March 1, 2023. Entrants in the Games Day Hack can take a share of up to ten-thousand dollars in rewards!

🍔 Grab It While It’s Hot

👩‍🎨 d’Art Drops

This week’s drop is the second of four pieces in Decentralized Arts’ collaboration with Cryptoartis.eth.

Portal to the Future
After a long and arduous journey, a traveler arrives at a portal. Unsure of what to expect, the traveler activates the portal with some hesitation. For a brief moment, nothing happens. Then, the portal slowly glows to life, opening a path forward to the future. Whatever the traveler may have anticipated, it was nothing like what they came to face: a cosmos rife with possibility, with Ethereum at the nexus.

Collect your copy before all editions sell out. If you haven’t already, subscribe to the DA newsletter to stay up on the latest NFT news and upcoming d’Art Drops.

🥳 Bankless Academy Update

The beginning of 2023 has brought new energy and highs for the Bankless Academy ecosystem thanks to the community's support. We’re excited to introduce a new lesson: Layer 2 Blockchains — supported by Optimism. Take the lesson and be upon the first to claim a new Academy Badge.

Bankless Academy 👩‍🚀 🚀 @BanklessAcademy

Bankless Explorers, a new lesson awaits on the horizon, alongside your next badge. We've joined forces with @optimismFND & @stonecoldpat0 to navigate: 🔁 Payment Channels 🌉 Bridges ⛓ Sidechains 📜 Optimistic Rollups ⚡ ZK Rollups 💿 EVM Equivalence 🔴✨ Starting on Optimism 👇

Bankless Academy Explorers can now claim a 1-Year Anniversary Gift with Lens Protocol! Explorers who've taken all Academy Lessons and claimed their Academy Badges up until February 16 are eligible to claim a Lens handle and participate in the wonders of web3 social. Follow banklessacademy.lens or Twitter to receive updates on the upcoming claiming process.

In other news, there’s no need to go to any specific App Store; you can download the Bankless Academy "Progressive Web App" (PWA). What is a PWA? Learn about it here, and download it here.

And finally, the Bankless Academy Writers Cohort is on now! During this past week, more than 55 web3-related articles were produced by Explorers from all over the world with a passion for web3 education. This cohort opens up possibilities to create content within the Academy ecosystem. Check out the different posts and articles in our Explorer community.

🎣 Phishing School

Authors: d0wnlore and the InfoSec Team

The BanklessDAO Airdrop Scam

Last week BanklessDAO was targeted in a fake BANK airdrop scam campaign through Discord, where new and compromised accounts were used to DM phishing website links to several of our members.

You know your community has made waves when they are targeted in a phishing campaign using that community’s governance token as the bait. But web3 users are becoming more knowledgeable about nasty tricks like these. Several bDAO members did their part to protect themselves and others by reporting the DMs in our #report-scams channel so that we could:

Immediately ban the accounts, whether they were still in the server or not.
Consider and implement solutions to reduce this from happening in the future.
Report the phishing website to the domain registrar in an effort to take it down.

But let's not rest on our laurels and instead learn from this event. Here are some takeaways you can reuse the next time you see a shady DM, whether through Discord or another communication channel.

Takeaways

Effective scam campaigns are often timed around a significant announcement or event. When excitement in the related communities is elevated, scammers are looking to tap into that FOMO, hoping you will be less likely to complete due-diligence. In our case the bDAO phishing campaign may have been timed for the start of Season 7, but we don’t have proof of that. Significant announcements from BanklessHQ may be used as anchoring dates for future scams as well.

Never trust an airdrop announcement made through a direct/private message by a stranger or bot. These are always part of a scam campaign that is looking to induce FOMO in people by blind-firing the same message to hundreds or thousands of them.

You can report a screenshot of any messages you receive in the #report-scams channel. Please try to collect the Discord User ID using this guide as that will help us stop scammers that evade bans by leaving the server after sending their messages out.

Don't assume that one method of communication is more trustworthy than another. Airdrop scams can come in various forms, from the DM we saw in the bDAO campaign to YouTube livestreams with stolen clips of crypto influencers overlaid with links to a phishing page. All forms of communication are susceptible to being used inappropriately by scammers with the right effort.

Legitimate airdrops do exist and you can find many of these in our #airdrop-station channel (gated to Level 1 members). It’s also best to be part of several news sources — Discord servers, email newsletters, Telegram chats, etc. — and cross-reference several sources once you start to hear news about an airdrop amongst them. This will also help you know the true website you need to use once the airdrop is available, if it requires interaction to claim.

🤣 Meme of the Week

Thanks links!

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