The whole fever of DeFi and high-risk investments may soon turn into Ethereum’s worst nightmare, and those responsible for this debacle may not be the yield farmers.
Rather, it could be the participants of a giant investment plan cataloged as a Ponzi/MLM scheme by several experts and authorities around the world.
For those unfamiliar with the situation, Forsage is a high-risk project (financially and legally) in the Dapp ecosystem. Like other sad examples in the crypto industry such as Bitconnect and Onecoin, it promises people quite attractive returns, which become even more attractive as more people enter the scheme.
What is Forsage?
Basically, Forsage works like this:
- Someone pays 0.05 ETH to join the project.
- The link to Forsage is shared; for each registration, a commission of 0.025 ETH of the 0.05 ETH entry fee goes to the link’s owner.
- The remaining 0.025 ETH is sent to higher levels of the pyramid, with most of the funds going to the anonymous positions at the top of the scheme, perhaps the pyramid scheme’s creators.
But in case of an eventual breach of confidence, the pyramid can no longer be sustained, and investors wanting to cash out, the price of Ethereum could fall to new minimums. Dovey Wan, the founder of Crypto Asset Holding Company “Primitive Ventures,” is convinced of this theory, as she reported on the scheme.
just for whoever lives in CT bubble: the ETH price floor is not from a few foodcoin scams or potential defi vault explosion, sadly is from the liveness of Forsage, the ongoing $ETH version Plustoken
I just check its activity which is still thriving, feeling comfy
— Dovey 以德服人 Wan 🪐🦖 (@DoveyWan) September 7, 2020
Why Could it be Dangerous for Ethereum?
The crypto expert has been following Forsage’s behavior and shared her impressions with her followers. In the last 30 days alone, Forsage’s smart contract has received $35.2 million in ETH. Still, a look at the historical data shows that the total volume of ETH injected into the contract has been decreasing — which is a warning sign for any Ponzi scheme near collapse.
Forsage does not have an identifiable team, nor does it establish any way to determine responsibility if something goes wrong.
“Each person’s success depends on themselves,” says the project’s website, “There are no risks on the Forsage platform. You just need to invite one person to recoup your initial membership expense.”