New Threats in the Blockchain World: Protocol Scams and Prevention Strategies

With the development of cryptocurrency and Blockchain technology, a new type of threat is quietly emerging. Scammers are no longer limited to traditional technical vulnerabilities, but instead are transforming Blockchain smart contract protocols themselves into attack tools. They exploit the transparency and irreversibility of Blockchain to turn user trust into tools for asset theft through carefully designed social engineering traps. From forging smart contracts to manipulating cross-chain transactions, these attacks are not only covert and hard to trace, but also more deceptive due to their "legitimized" appearance. This article will analyze examples to reveal how scammers turn protocols into attack vectors and provide comprehensive protection strategies.

1. The Operating Mechanism of Protocol Scams

Blockchain protocols are supposed to ensure security and trust, but scammers cleverly exploit their features, combined with user negligence, to create various covert attack methods. Here are several common techniques and their technical details:

1. Malicious Smart Contract Authorization

Technical Principles: The ERC-20 token standard allows users to authorize a third party to withdraw a specified amount of tokens from their wallet through the "Approve" function. This feature is widely used in DeFi protocols but is also exploited by scammers.

Operation method: Scammers create DApps that disguise themselves as legitimate projects, enticing users to connect their wallets and grant permissions. On the surface, they authorize a small amount of tokens, but in reality, it could be an unlimited amount. Once the authorization is completed, scammers can withdraw all corresponding tokens from the user's wallet at any time.

Real case: At the beginning of 2023, a phishing website disguised as "a certain DEX upgrade" caused hundreds of users to lose a large amount of USDT and ETH. These transactions fully complied with the ERC-20 standard, making it difficult for victims to recover their assets through legal means.

2. Signature Phishing

Technical Principles: Blockchain transactions require users to generate signatures using their private keys. Fraudsters exploit this process to forge signature requests and steal assets.

Operating method: Users receive messages disguised as official notifications, guiding them to a malicious website to sign "verify transaction". This transaction may directly transfer the user's assets or authorize the scammers to control the user's NFT collection.

Real cases: A well-known NFT project community suffered a signature phishing attack, with multiple users losing NFTs worth millions of dollars due to signing a forged "airdrop claim" transaction. The attackers exploited the EIP-712 signature standard to forge seemingly secure requests.

3. Fake Tokens and "Dusting Attack"

Technical Principles: The openness of the Blockchain allows anyone to send tokens to any address. Scammers take advantage of this by sending small amounts of cryptocurrency to track wallet activity and associate it with individuals or companies.

Operation method: Scammers send small amounts of tokens to multiple addresses, which may have misleading names or metadata. When users attempt to cash out, attackers may access user wallets through the contract address. More insidiously, by analyzing users' subsequent transactions, they can identify active wallet addresses and carry out targeted scams.

Real case: The "GAS token" dusting attack occurred on the Ethereum network, affecting thousands of wallets. Some users lost ETH and other tokens due to curiosity and interaction.

2. Reasons Why Fraud is Difficult to Detect

The success of these scams is largely due to their concealment within the legitimate mechanisms of the Blockchain, making it difficult for ordinary users to discern their malicious nature. The main reasons include:

1. Technical complexity: Smart contract code and signature requests are obscure and difficult for non-technical users to understand.

2. On-chain legality: All transactions are recorded on the Blockchain, appearing transparent, but victims often only realize the problem afterwards.

3. Social Engineering: Scammers exploit human vulnerabilities such as greed, fear, or trust.

4. Sophisticated disguise: Phishing websites may use URLs that are similar to official domain names, and even enhance credibility through HTTPS certificates.

3. Strategies for Protecting Cryptocurrency Wallets

In the face of scams that combine both technical and psychological warfare, protecting assets requires a multi-layered strategy:

1. Check and manage authorization permissions

• Use the blockchain explorer's authorization check tool to regularly review and revoke unnecessary authorizations.
• Before each authorization, ensure the source of the DApp is trustworthy.
• Pay special attention to the "unlimited" authorization, which should be revoked immediately.

2. Verify links and sources

• Manually enter the official URL to avoid clicking links in social media or emails.
• Carefully check the website domain name and SSL certificate.
• Be wary of any misspelled or extra character variants of domain names.

3. Use cold wallets and multi-signature

• Store most of your assets in a hardware wallet and connect to the network only when necessary.
• Use multi-signature tools for large assets, requiring multiple keys to confirm transactions.

4. Handle signature requests with caution

• Carefully read the details of each signed transaction.
• Use the decoding feature of the blockchain explorer to analyze the signature content.
• Create a separate wallet for high-risk operations, storing only a small amount of assets.

5. Responding to Dust Attacks

• Do not interact with unknown tokens after receiving them.
• Confirm the source of tokens through the Blockchain explorer, be cautious of bulk sending.
• Avoid exposing wallet addresses or use a new address for sensitive operations.

Conclusion

Implementing the above security measures can significantly reduce the risk of becoming a victim of advanced fraud schemes. However, true security does not solely rely on technical safeguards. Users' understanding of authorization logic and their cautious attitude towards on-chain behavior are the last line of defense against attacks. Every data analysis before signing, and every permission review after authorization, are all part of maintaining one's digital sovereignty.

In the world of Blockchain, code is law, and every click and every transaction is permanently recorded and cannot be changed. Therefore, internalizing security awareness as a habit and maintaining a balance between trust and verification is key to ensuring asset safety.