DappBay Rings Alarm as Project Misleads Users

DappBay has demonstrated its critical role in protecting the blockchain community by identifying and exposing high-risk projects through its Red Alarm function. Shortly after its launch, DappBay successfully flagged the "Day of Rights DAO" project, which subsequently perpetrated a deceptive scheme to mislead users and misappropriate funds. This case study illustrates the importance of rigorous risk assessment and rapid detection mechanisms in the cryptocurrency ecosystem.

DappBay in Action

The Red Alarm function on DappBay serves as an essential warning system for the blockchain community, regularly displaying high-risk projects to alert users before they can be exploited. By leveraging advanced blockchain infrastructure and sophisticated data analysis capabilities, DappBay provides detailed risk ratings and specific information about each flagged project. This proactive approach demonstrates how proper due diligence and transparent risk analysis through DappBay can effectively protect innocent investors from fraud.

Overview

In July 2022, the Day of Rights project executed a soft rug pull involving its $AMO token. The scheme resulted in the sale of over 100,000 tokens, generating approximately $1 million in fraudulent proceeds. The attacker's methodology involved minting 10 million tokens to a primary wallet, then transferring 520,000 tokens to a secondary wallet designated for dumping. This coordinated action resulted in a dramatic 63% price collapse, demonstrating how quickly bad actors can execute their schemes once launched.

Background

According to the Day of Rights DAO's whitepaper, the project's ecosystem was designed to incorporate three main tokens: the $DOR token as the primary utility token, the $AMO token for Dorswap currency operations, and the $BIN token also serving as a Dorswap currency. For the purposes of understanding this particular incident, the analysis focuses exclusively on the $AMO token and its exploitation, as this was the primary vehicle through which the rug pull was executed.

Addresses involved

The following blockchain addresses were directly implicated in the fraudulent scheme:

• AMO Token contract: 0x7a349cccbb341d57e274c298f1e4751fb33158e5
• $AMO Deployer wallet: 0x6aebde28f25647bd61087e8020b9ca0eb10e0529
• $AMO Supply Wallet: 0x49aa9c715e8df5920b51a224cddad62aac1af966
• $AMO Dumping Wallet: 0x8113f0d4412b0399b1ec3bc7ba2a096e91f6fd8c
• $AMO-$USDT Liquidity Pool: 0x2126771205c34e273e53d3d8af50e1daa17fbe9d
• $DOR-$USDT Liquidity Pool: 0x31ea275ca9ed412f80ebc8b7ac705ece5f263cb0

These addresses provide a complete audit trail of the fraudulent activities, enabling security researchers and platform operators to track the movement of illicit funds and understand the mechanics of the attack.

Incident Timeline

The timeline of events reveals how quickly DappBay's detection system functioned and how rapidly the fraudsters acted:

July 4, 2022, 06:00:00 UTC

DappBay officially launched its Red Alarm function and published an initial list of 27 high-risk projects identified on major blockchain networks, including the "Day of Rights DAO." DappBay issued a specific risk warning noting that the contract contained logical and programming backdoors capable of draining user funds, and that the contract owner possessed the ability to execute rugpulls through privileged functions, token dumping, or contract migration.

July 4, 2022, 11:44:06 - 14:20:52 UTC

The $AMO Deployer initiated the fraudulent scheme by minting 10 million $AMO tokens directly to the $AMO Supply Wallet. Subsequently, the Supply Wallet transferred 520,000 tokens to the designated $AMO Dumping Wallet, preparing for the coordinated price manipulation attack.

July 9, 2022, 10:50:36 - 11:24:48 UTC

The $AMO Dumping Wallet executed the core attack by selling more than 100,000 $AMO tokens in exchange for $USDT through the $AMO-$USDT liquidity pool. This rapid selling pressure caused significant downward price movement.

July 12, 2022, 03:00 UTC

By the time of analysis, the fraudsters had dispersed the stolen $USDT funds through multiple strategies. Some funds were transferred to burner wallets to purchase $DOR tokens in the separate $DOR-$USDT liquidity pool in an attempt to artificially inflate prices. Approximately 100,000 $USDT tokens remained in the dumping wallet, while remaining funds were used to repurchase $AMO tokens to create false buying pressure.

Analysis

A comprehensive examination of the Day of Rights DAO scheme reveals multiple critical security vulnerabilities and red flags that should serve as warnings to investors:

Unverified Smart Contract Code

The $AMO token smart contract remained unverified and closed source, representing a fundamental transparency failure. When projects decline to publish their contract source code for public verification, it creates an environment where hidden malicious functions and backdoors can operate undetected. This lack of transparency is universally recognized as a high-risk indicator in the blockchain security community.

Extreme Centralization Risk

Analysis revealed that 89.5% of the total token supply was concentrated in a single wallet ($AMO Supply Wallet), indicating extreme centralization. This concentration of control over the vast majority of tokens creates inherent vulnerability to price manipulation and sudden large-scale token dumps that can devastate retail investors.

Artificial Price Manipulation

The perpetrators employed sophisticated manipulation tactics by coordinating purchases through multiple burner wallets timed to create artificial buying pressure. By purchasing tokens within compressed time windows, the attackers created a false appearance of organic market demand, attracting unsuspecting retail investors who interpreted the activity as genuine market interest.

Misappropriated Funds

The complete absence of productive use for the stolen funds underscores the fraudulent nature of the scheme. Rather than deploying capital toward legitimate development or operational purposes, the perpetrators immediately repurposed stolen funds either to prop up artificial token prices or transferred them to personal accounts, demonstrating clear intent to defraud users.

Conclusion

The Day of Rights DAO incident exemplifies the critical importance of automated risk detection and rapid response mechanisms in protecting cryptocurrency investors. DappBay's Red Alarm system successfully identified and publicly warned about the project before the rug pull occurred, demonstrating that effective risk analysis relies on comprehensive data analysis, deep technical expertise, and immediate action. The key risk characteristics identified—high centralization risk, unverified smart contracts, and price manipulation tactics—serve as essential markers that investors should evaluate when assessing project legitimacy. By utilizing platforms like DappBay's Red Alarm module and understanding these risk indicators, the blockchain community can significantly enhance asset security and avoid becoming victims of fraudulent projects. Continued vigilance through DappBay monitoring, transparency from project developers, and community-wide awareness of these attack patterns remain essential components of a robust ecosystem defense strategy.

FAQ

What is DApp used for?

A DApp is an application running on blockchain via smart contracts, enabling decentralized finance (DeFi), NFTs, and other trustless services without central servers. Transaction fees vary based on smart contract complexity and blockchain network.

What are examples of dApps?

Popular dApps include Uniswap (decentralized exchange), Aave (lending protocol), OpenSea (NFT marketplace), Axie Infinity (blockchain game), and Lido (liquid staking). These showcase DeFi, gaming, and NFT applications on blockchain networks.

What is DApp wallet?

A DApp wallet is a digital wallet enabling users to interact with decentralized applications on the blockchain, facilitating secure transactions and access to decentralized services without central authority control.

What is the difference between DApps and traditional apps?

DApps run on blockchain networks offering decentralization and user control, while traditional apps operate on centralized servers controlled by single authorities. DApps enable trustless transactions and transparent operations, whereas traditional apps depend on intermediaries for data management and security.