What Is Shilling In Crypto And How Does It Work?
You'd have most likely seen several promotional headlines like "CoinB 100x potential soon" or "Buy CrypoJ now! Massive pumps incoming". This marketing strategy instills a sense of FOMO, and you're likely going to hit the buy button after reading a few misleading resources. And you assume you've "DYOR"?
While scammers often abuse this form of promotion, legit crypto projects have also adopted it to give them the needed visibility. For such activities, influencers are employed on YouTube, Twitter, or other social media platforms.
Well, which project doesn't want to attract more investors? However, you must be able to differentiate between scams and legit ones to avoid being a victim of shady projects. Hence, you've got to do diligent research on what you're investing in.
Let's dive into what crypto shilling is and how it is done…
What You Should Know About Crypto Shilling
Shilling is a rigorous marketing activity aimed at inducing hype for a crypto project. As the hype around such projects rises, more people tend to buy into them. And due to an increase in artificial demand, there is usually a spike in price.
Most investors are in for quick gains — say 2-10x of their initial investments — and others who intend to HODL for long-term are usually dumped on. After the initial mooning of such projects, it is common to see them rug pull; devs or project owners abandon them and run away with your money. In such a case, if you made a profit, that's your luck! And if you HODL, that's your loss!
Individuals who "shill" are called "shillers." However, you shouldn't be surprised to see your favorite influencers or celebs participating in shilling activities. Yes, these guys are paid heavily to promote or endorse such projects and also make good profits from the actual tokens.
Fake volume spikes, spamming, and/or outright lies are some ways they do this. As such, inexperienced investors are easily lured into buying into the project, especially when the Shiller is someone they trust. On the other hand, experienced investors like me could tell from the onset if the project is fake.
Nevertheless, not all crypto promotions are a part of shilling activities!
How To Identify Crypto Shilling When You See One
You're aware that "shilling" is adopted by a scam and genuine crypto project. However, you should be able to tell the difference(s) between shilling activities conducted by fake and real schemes. Some promoters are quite dishonest when shilling their so-called favorite projects; the financial projections or ROI promised on the projects is ridiculous, but I'm not saying it is unachievable.
Shillers could be some influencers, marketers, or founders/team members whose activities are likely based on pure sentiments. Now that you know who a Shiller could be watch out for these red flags in their promotional activities.
One of the marketing strategies crypto projects adopt to reach a broader audience is Influencer marketing. While this isn't a wrong marketing approach, it is abused by some other shady projects.
A crypto influencer should be well-versed in the subject of cryptocurrencies. Their knowledge should not just be limited to how crypto investments are done. They should also be knowledgeable about how the ecosystem works.
If a so-called influencer with little to no experience with blockchain technology promotes a relatively unknown token or blockchain project, that's an outright red flag!
Moreover, you should find out if he has done any in-depth reviews or analyses of crypto projects in the past. If not, what he's promoting is likely a red flag! Genuine crypto influencers have to protect their reputation both offline and online. Therefore, they give their candid opinion about any blockchain project they promote.
Some individuals capitalize on their marketing prowess or leverage the situation surrounding a particular token to shill it. An example of this was seen during the meme coins bubble. Elon Musk, the CEO of Tesla, promotes Dogecoin. He's, however, perceived as an investor rather than a marketer.
In a series of Tweets, he probably exhibited his support for Dogecoin after filling his bags and needed to pump for profit-taking. One of his tweets was about accepting Dogecoin as a form of payment in his company, which led to a massive price spike.
Many retail investors thought Doge would hit $1, but this appeared to be a dream. Currently, the price of Doge is down by more than 1000% or 10x since its all-time high on May 8th, 2021.
In crypto, such coins or tokens are called "pump & dump." Other meme coins like SHIBA INU also operated similarly.
3. Founders/Team Members
Who should be most energetic about their projects besides founders or team members? They want you to invest in their project and attract funding for it. How do they get your attention? Of course, through the hype they create.
While this is not necessarily scammy, you should see through them if they're lying. This category of promoters is best positioned to answer your questions about their projects. And you can only know the right questions to ask when you DYOR.
Thoroughly read through the project whitepaper, see what they stand for, assess their tokenomics, and find out if they've worked in line with their roadmap. A well-documented whitepaper should include all these and give clear information on the token utility. From your research, you can tell if they're overselling the project.
Shilling Vs. Other Crypto Promotions
In the crypto market, it is generally believed that shilling is majorly used to promote scam projects. This isn't true because legit projects also use it to promote their projects less aggressively.
Real crypto promoters are not always biassed when reviewing a crypto project. They give you genuine and in-depth reasons why they're considering investments in the projects they promote. Shillers, on the other hand, only highlight the financial promises the project might give you in the shortest period.
You can say these guys are part of the scam! They work closely with the project team to know when to exit their positions and leave you with your deflated bags.
Moreover, shills won't stop ranting about the project they're promoting. They won't stop giving you that sense of FOMO, and you could eventually fall into their trap. Honest crypto promoters, however, won't sell the project to you — you make the decision!
How To Avoid Losing Your Money To Shady Crypto Projects
You should understand that even real projects shill their tokens to give them the exposure they want. Irrespective of your perception of a project (genuine or fake), you still need to filter the noises spreading across the internet.
Take the precautions below to avoid losing your hard-earned money to shady crypto projects shilling their tokens.
- DYOR: For any crypto investments you'll be doing, I recommend you understand what you're investing in by doing your own research. DYOR helps you filter the noises circulating across social media.
- Don't FOMO or YOLO: Because your favorite influencer or celebrity endorses a project does not necessarily mean it is worth your money. Although the ROI promised by these projects could be high, you should avoid FOMO or YOLOeing. If you must do that, only FOMO with what you can AFFORD to lose.
- Look at how knowledgeable the Shiller is about cryptocurrency or blockchain technology. If their fundamental analysis knowledge is shallow, how do they identify a good crypto project to invest in? You might want to stay away!
By now, you should have a good grasp of crypto shilling and its workings. Therefore, it is essential to do the necessary research if you're going to invest in such tokens.
If you find this piece interesting, ensure to share it across your social media pages for your followers to learn as you have.
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