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Decentralized Finance or DeFi has shown a new era of economics that the world has never seen before. This space has erupted into popularity in the past decade or so surpassing adoption rates we have not seen in the history of finance.
What is Decentralized Finance?
Decentralized Finance is all aspects of a financial system that is not governed or regulated by one or more authoritative bodies that have the best interests of the people.
So this is bad…
There is no red tape or anyone telling you how to handle your money with DeFi. There is no man-in-suite to punish you with rules and regulations. DeFi takes no holidays or time off.
On top of all this, since DeFi space is still so new, there are massive returns to early adopters (we are talking about anywhere from 5% — 200%+ returns per annum).
Problem With Defi
With fewer regulations and no one to impose the interest of the majority on DeFi space, comes scams.
DeFi is faceless. It’s from the people to the people. But some people don’t have the best intentions in their minds. It is rather easy to get away with a crypto scam than a bank heist.
So, when bad actors get into DeFi and crypto projects, people lose.
Enter JUMP’N
Move-to-earn space in cryptocurrencies has been blowing up recently. When there is a next big thing in crypto, it naturally attracts a lot of attention and thus a lot of money.
STEP’N crypto project popularized the move-to-earn concept and they are a very legit operation with over a $1 billion in valuation in a few months after release.
This kind of money attracts predators.
This is where we come across JUMP’N.
This crypto project promised to bring a revolution in the move-to-earn space (a pretty standard claim among all crypto projects) and everything looked pretty standard with everything else in the project as well.
They had a pretty solid whitepaper written down, a good-looking website, a contract audited, and most importantly a massive following due to the popularity of the move-to-earn space at the time.
The project did launch and their native currency Jump Satoshi Token (JST) was listed on decentralized exchanges.
But, nobody could sell their tokens!
Crypto Honeypots
A honeypot in cryptocurrency resembles a honeypot in real life. Small insects get easily stuck in honey. Given a large enough honey pool, a human can easily get stuck in it and drown.
A crypto honeypot is where the crypto contract of project limits or blocks the selling of its tokens. Essentially, holders of the token can only hold on to their tokens and buy more.
Since the contract does allow people to keep buying their token, the price goes up really sharp, as there is free-market trading taking place.
From 0.30 cents to $44 dollars
JST token price go through the roof because no selling was taking place. But the buys continued, thus increasing the value of a single token. From April 29, 2022, to May 7, 2022 the JST price increased by 72,000%.
From 0.30 cents to $120 dollars
JUMP team introduced a new token named Jump Energy Token (JET). This was supposed to be the token that allows people to sell JST. Essentially, you hold JET in your wallet which enables you to sell JST.
So, pretty neat now that you can finally cash out your millions. Not so fast. You could not buy JET from anywhere. The only way you could JET was through random drops whenever other people buy JST.
It was distributed to random wallets at random amounts, and it was never more than 10–100 JET at a time for a single wallet.
So, the exchange ratio was something like 10:1. The ratio only kept getting worse as days went by.
They introduced farms to earn JET which was supposed to enable the sale of JST. But people could only lock their money in these farms and were unable to take out JET earnings. Their latest token, JUT, is supposed to enable the withdrawal of JET tokens from their farms.
At this point, the whole mechanism has gone down a few levels deep into the honeypot scam.
Could the investors talk to the team behind JUMP about all of this? Their Twitter replies are blocked, and Telegram channels were restricted to the admin team only.
Soon after, the JST price started crashing. I believe this is the JUMP team selling their tokens.
The people who bought JST from the presale were only able to sell a fraction of their holdings, if at all.