PASSIVE token is one such project that recently captured the attention—and wallets—of many within the crypto community. Marketed as a revolutionary DeFi (Decentralized Finance) project on the SmartDeFi™ platform, PASSIVE promised lifetime passive income with an astonishing 3,650% annual percentage yield (APY). Yet, just days after its launch, the token's value plummeted, leaving investors questioning whether they were victims of a well-orchestrated scam.

This article delves deep into the rise and fall of the PASSIVE token, examining the red flags that were raised, the transactional data that hints at fraudulent activity, and the lessons that can be learned to safeguard against similar pitfalls in the future.

The Temptation of High Returns

When PASSIVE made its debut, it was hard to ignore. The project's website, touted a user-friendly staking dashboard and a secure ecosystem, all wrapped in promises of lifetime passive income. Investors were lured by:

• Astounding APY: A 3,650% annual percentage yield is hard to resist, especially when traditional investments offer a fraction of that.
• Association with SmartDeFi™: Being built on a platform known for its security features lent PASSIVE an air of legitimacy.
• Community Buzz: Social media channels and Telegram groups were buzzing with discussions about the potential windfall that PASSIVE could bring.

It wasn't long before over 32 stakers jumped on board, hoping to capitalize on what seemed like a golden opportunity.

Early Warning Signs Ignored

Amidst the excitement, not everyone was convinced. In various Telegram channels related to the SmartDeFi™ ecosystem, a user known as "DICEROLLS," developer of the "DICE" project, voiced concerns that, in hindsight, were alarmingly prescient.

"Watch out with PASSIVE; it's a scam, in my opinion," he warned. He urged others to scrutinize the smart contract, pointing out that the allocation of tokens was suspicious. According to him, the project had:

• 1.5 Million in Swap Supply
• 500,000 in Developer Supply, which were placed inside the Staking Contract
• 98% of the total tokens locked in the Staking Contract

This allocation meant that the developers had significant control over the token's supply and could manipulate the market to their advantage. "They farm everybody else," he lamented, suggesting that the high APY was unsustainable and served only to entice more investors into a potential trap.

It was later revealed that 500,000 tokens from the Developer Supply were staked into the project's own contract, allowing them to farm significant rewards daily. Some estimates suggested that this setup could generate up to 45,000 tokens per day for the developers. While the community speculated that the developers could have exploited this further, their actions raised red flags. "Maybe they got 'scared' greedy and cashed out," observed one user. This suspicion led to speculation that community scrutiny, like the warnings from DICEROLLS, may have deterred the team from fully executing such a strategy.

Others in the community echoed these concerns:

• "How on earth is PASSIVE at a 2.6 million market cap?" one user questioned, skeptical of the rapid valuation increase.
• "So PASSIVE already 'rugged,' right?" another quipped, alluding to a rug pull—a common crypto scam where developers abandon a project after securing significant investment.

Despite these warnings, the fear of missing out (FOMO) drove many to invest anyway, hoping to get in and out before any potential collapse.

Here's an image of the Fees Details of PASSIVE (provided by: https://sdmarketcap.com/token/BSC/PASSIVE)

The Role of SmartDeFi™ and Developer Decisions

Adding to the controversy was the decision by PASSIVE's developers to bypass the SmartDeFi™ staking protocol created specifically for SD projects. Instead, they built an external staking protocol outside of the SmartDeFi™ ecosystem, which raised further suspicions about their intentions.

Additionally, the developers used private liquidity pools rather than launching the project with a Liquidity Generation Event (LGE), a standard and transparent method for initializing liquidity in the ecosystem. By setting up their BNB pair liquidity themselves, the developers maintained significant control over the token's liquidity, creating opportunities for manipulation.

By bypassing the inherent security features of the SmartDeFi™ protocol, the developers of PASSIVE exposed investors to significant risks. SmartDeFi™ is designed to provide a secure environment for token creation and trading, offering features such as:

• Rug Pull Protection: Liquidity is permanently locked within the token's smart contract, preventing developers from withdrawing funds and abandoning the project.

• Asset Backing: Each token has an intrinsic baseline value supported by a separate asset pool, ensuring a minimum value that cannot decrease.

• Integrated Exchange: Tokens contain their own exchange mechanisms, eliminating reliance on external platforms and reducing vulnerabilities.

By opting for an external staking protocol and private liquidity pools, PASSIVE's developers circumvented these safeguards, leaving investors unprotected against potential fraud and market manipulation.

SmartDeFi™ representatives strongly advise investors to prioritize tokens launched through a Liquidity Generation Event (LGE) and marked as SAFU. These projects adhere to the highest security standards provided by the SmartDeFi™ ecosystem. Unless you are an expert investor or have in-depth knowledge of the team behind a project, it is highly recommended to avoid investing in tokens outside of this framework.

Unpacking the Transactional Data

To understand what truly happened with PASSIVE, it's essential to look at the transactional data on the Binance Smart Chain (BSC). The data reveals patterns that are, at best, questionable and, at worst, indicative of deliberate fraud.

The Inevitable Collapse

Despite early warnings and questionable transactional behavior, the inevitable happened. The token's value collapsed, and investors were left holding the bag.

Timeline of Events

• Initial Surge: PASSIVE's market cap reportedly soared to $2.6 million, drawing in more investors enticed by the high APY and rapid growth.
• Liquidity Drain: Significant amounts of liquidity were removed from the pool. Without sufficient liquidity, the token's price became volatile and prone to sharp declines.
• Price Crash: The token's value plummeted from $0.041 to $0.004 in a matter of hours.
• Communication Blackout: The developers ceased communication, and the official Telegram group became inaccessible, classic signs of a rug pull.

Investors, especially those who ignored the early warnings, faced substantial financial losses. The community that once buzzed with excitement now filled with anger and demands for accountability.

If you were affected by the PASSIVE token incident or have additional information to share, we invite you to contribute to uncovering the full story. Please feel free to reach out to us at contact@sdmarketcap.com. Your insights could help protect others and shed light on deceptive practices in the crypto space.

Disclaimer: This article does not constitute financial advice or an endorsement of any project or token. Readers are encouraged to conduct their own research (DYOR) before investing in any cryptocurrency.