Virtual Money fraud exploded! The Rafi protocol collapsed, ARK and ORA are on the danger list.

The Eternal Protocol collapsed in just two days, and a similar model, the LAF protocol, also declared its collapse due to virtual money fraud. The coin price fell to single digits, and the pool was emptied to just a few million, with tens of millions of USDT being siphoned off in just about 10 days, leaving countless participants with nothing. This scheme promised a daily interest of 1.5% for an investment of 1000 USDT, with a 30-day cycle and an annual percentage rate as high as 547.5%, but it was in fact a Ponzi Scheme.

pump Lafite protocol Virtual Money eyewash's big dump trajectory

(Source: Feixiaohao)

The Lafite protocol claims to have been online for a year, but the real explosion occurred in October, as it had been lukewarm before that. Most of the victims participated in these two months of October and November. This conforms to the typical pattern of all Virtual Money fraud schemes: the longer it develops, the more people join, and the bigger the bubble gets, leading to a faster collapse. What supports a 1.5% daily Interest bubble? It is completely unrealistic.

This virtual money scam project has all sorts of grandiose promotions: “Safe and Free”, “100% Discarded Authority”, “Building DeFi 4.0 Decentralized On-chain Financial Management” - but in reality, it's just a dividend-type fund that takes in U and pays out U. On the surface, it seems fine, and you can earn back your principal and interest when it matures, but many people overlook the core issue: who will give you your principal and interest after maturity? What will they use to pay you?

Whether it is a centralized fund scheme or this kind of decentralized fund scheme on the chain, there is an essential problem: its operating model completely contradicts normal business rules. What supports such terrifying daily high returns? Even robbery can't sustain such high returns. Moreover, these virtual money fraud projects almost have no real business operations, meaning they lack a blood-making function, making it impossible for them to develop sustainably in the long run. The bubble will only get bigger until it collapses, relying entirely on the principal of later participants to pay the principal and interest returns of earlier ones, which is completely a Ponzi Scheme.

“Decentralization” does not legalize virtual money scams

Some participants may argue: “With all permissions discarded, transparency ensured, and no one in control, a real blockchain project won't collapse and run away.” This is a dual misunderstanding of the essence of blockchain technology and virtual money scams. Blockchain technology is merely a tool; a Ponzi Scheme cannot change its essence regardless of the technology used. The so-called “discarding of permissions” simply means that the project team cannot directly shut down the smart contract technically, but when the pool is drained and no new funds come in, this virtual money scam system will naturally collapse.

Some people also mention “underlying logic” — what is underlying logic? An underlying logic that has no real operating enterprises and no ecological applications to support it? An underlying logic with an annual percentage rate so high that it makes robbing look slow? An underlying logic that could collapse and run away at any time? The underlying logic of these virtual money scam projects is nothing but a thorough Ponzi Scheme, just wrapped in the guise of blockchain.

Five Red Flags for Identifying Virtual Money Scams

High Yield Promise: Projects with daily interest exceeding 1% and Annual Percentage Rate exceeding 100% are 99% Virtual Money fraud schemes, violating basic business logic.

No Real Business: There are no actual products, services, or sources of income, purely relying on the funds from new investors to pay returns to old investors, a typical Ponzi Scheme structure.

Forced Lock-Up and Referral Rewards: Requiring a lock-up period and providing high rewards for referrers is aimed at rapidly expanding the capital pool and delaying a collapse.

Anonymous Teams and False Endorsements: Team members with unknown identities or using pseudonyms, claiming to have received investments from well-known institutions but unable to verify, are standard features of virtual money scams.

Sudden Surge in Community Activity: The number of community members skyrockets in a short period of time, with promotional information everywhere, typically marking the last crazy capital-raising phase before a crash.

Which virtual money scam will be the next big dump?

The collapse of the Eternal protocol, the Golden Horse protocol, and the Lafite protocol—what will be the next to collapse? ARK? ORA? Aude? V5? Golden Cicada? These projects share similar characteristics: promises of extremely high returns, no real business, and mandatory lock-up mechanisms. Whether centralized or decentralized, as long as it's a fund scheme, participating in it is no different from gambling.

Investing little won't earn you much money, while investing a lot will certainly result in losing everything once a collapse occurs. In fact, among 10 virtual money scams, 9 are short-lived schemes, so your chances of winning are very low. Among the victims of the Rafy protocol, some invested tens of thousands, hundreds of thousands, or even millions. They may genuinely not realize that this is a virtual money scam that could collapse and run away at any time, or they might be gambling—betting that they won't be the last one holding the bag, betting that they can withdraw before the collapse, or betting that it won't collapse until tomorrow.

Every day, playing these funding schemes makes me anxious, and I feel sad not having made any money. When investing to make a profit, safety should always be the top priority. Don't just focus on high returns, and definitely don't invest with a gambling mentality. Engage in activities that have relatively high certainty, and do things that are relatively stable and can sustainably make money over the long term. Virtual money scams are all games of passing the buck. Either the project party closes down and runs away, or they get investigated by the government. Everyone must stay away from these funding scheme eyewashes.