Forced Crypto Swaps Are Criminal
Yes, you heard me, almost every forced swap in crypto is downright criminal and should be treated as such.
This article is not aimed at a certain forced swap from a specific crypto coin or token, it’s aimed at the complete mechanism of forced crypto swaps. All those of us who’re familiar with crypto are also familiar with this specific phenomenon, aren’t we? Yeah, we are, and isn’t it curious how it’s almost always presented through the same peculiar fashion:
‘‘It’s not too much of a big deal, bro’’
’’It’s just a swap, bro’’
’’Don’t think too much of it, bro’’
’’It doesn’t actually changes anything, bro’’
Yeah, so about that, are there even real and valid reasons to mandate forced swaps to begin with? Again, we’re all very familiar with the standard arguments that at some point in time will definitely be provided by the developers, aren’t we? But I’ll give you some examples anyway:
Developer: We’re switching from one chain to another!
Me: Ok, so why don’t you just build and maintain a bridge between those different chains?
Developer: We’re rebranding so we need a new token with the new name!
Me: Valid reason, definitely, but what about those new tokenomics I’m seeing? Why is the supply of the new token bigger than the supply of the current token? The swap ratio between the new and the old token seems to be 1:1? Doesn’t this dilute the holdings of the holders of the current token?
I could go on for a while, but the point is clear, forced swaps in crypto simply involve many different problems which aren’t getting addressed nor talked about in most cases. And to make my point even more clear I will now showcase an imaginery ‘‘average’’ forced crypto swap, behold the ‘‘average’’ forced crypto swap from OKIEDOKIE coin to AIGHT coin:
Yeah, this seems about right, these are literally the average pre-conditions of the average forced swap in crypto. You see the problem(s)? I certainly do, and often (like in my example) there’s even a hard deadline included. A hard deadline basically comes down to that everyone who didn’t swap in time (before the expiration of the deadline) will lose their complete investment. Doesn’t this equal theft you might ask? Many developers don’t seem to think so, but I do.
The same principle applies to a dilution of an old token supply, which in most cases of forced crypto swaps is absolutely somewhat like the numbers in my example:
150 million OKIEDOKIE coins being swapped for 3 AIGHT coins each equals a total of 450 million AIGHT coins. So if the new AIGHT coin has a total supply of 600 million AIGHT coins it equals a dilution of 33% for OKIEDOKIE coin. How is this fair to the holders of OKIEDOKIE coin and what’s going to happen with those extra 150 million AIGHT coins?
Developer: It is fair! Those extra 150 million AIGHT coins will be used for development, we’re moving forward! That is primarily and foremost in the interest of all former holders of OKIEDOKIE coin who’re now the current holders of AIGHT coin!
Me: Ok, so you’re basically going to cash those extra 150 million AIGHT coins by selling them to the market? So you’re basically going to dump them on the former holders of OKIEDOKIE coin who’re now the current holders of AIGHT coin?
In conclusion I would like to remark that there are many other possible angles and problems to forced crypto swaps, these problems are simply the most common and quite frankly also the most important ones. My main advice when it comes to forced crypto swaps would be to run as far away as possible from coins or projects that have in the past or are about to mandate it. If or when that’s not a viable option, maybe because you’re invested too deeply into that specific coin or token and you don’t want or can’t afford to sell your current investments at a loss. Then I would recommend to study the complete construction of the swap (thus all former and new tokenomics) and read all of the small letters very, very well. Because then it’s very likely that you’re about to be (involuntarily) involved in a ‘‘criminal’’ forced crypto swap.
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