Davor Coin was not shy about its claims, positioning itself as “one of the most ambitious crypto coin projects”. And then, just like that, amid warnings and skepticism, Davor Coin pulled its long-expected exit scam. The second week of February was rough on the crypto markets, as most coins, including the leader, Bitcoin, found themselves down 70% from their peaks, inflaming distrust among investors.
In this time period Davor Coin released its staking tokens, not unlike BitConnect. And once the digital asset hit the free market outside the confines of the lending scheme, that was pretty much the end a that point.
Please read our latest announcement : https://t.co/XczhqQe0PC
— DavorCoin (@DavorCoin) February 7, 2018
Davor Coin was unlucky; a rough patch on the crypto markets, plus a quick incursion from the Texas authorities brought it to its knees. Not before overly-optimistic investors bought in, believing they were not only in for regular returns, but for a grand prize of $1,000,000.
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The Origins of Davor Coin
Davor Coin is a phenomenon of the second half of 2017, when the crypto world really saw things pick up. At that time, BitConnect was already running for months, but its rise had been more gradual. As for DavorCoin, it had a very small window to recreate the lending scheme.
The Davor Coin became more well-known toward the end of 2017, just as the entire market had an unprecedented boom. And this is what makes lending schemes work: the constantly rising price of Bitcoin has the chance of creating just the right windfall for the project. This way they could pay out rewards in dollars (at least for a time), to create some short-lived success stories to bolster the scheme as “legit”.
How Davor Coin Works
Davor Coin states its value rests on a “lending scheme”, a cover-up for an actual pyramid scheme since the rewards depend on a referral program.
The Davor Coin exchange also held an artificial exchange rate between the DAV digital asset and Bitcoin, ensuring that new entrants would pay reasonable amounts of valuable BTC coins, which would pad out the scheme and make it run a bit longer.
Davor Coin also claims to be a Scrypt-based minable coin, with an additional proof-of-stake. The staking reward was yet another juicy bit for investors, as the rewards of 10% monthly for the first six months are pretty high returns. Regular staking coins never offer such high rewards, and the staking part may have been a mechanism to keep the coins locked.
Additionally, Davor Coin promised a lottery with a grand prize of $1 million, which drew in more greedy investors.
Unfortunately, the Davor Coin DAV digital asset had no value on exchanges, or in the real world, so as soon as the price of Bitcoin tanked, the project unlocked all mechanisms and gave back DAV coins to its backers. The problem is, DAV coins were now worthless.
The Public Profile of Davor Coin
Davor Coin did all the publicity things right, creating the image of a typical ICO, building a community around its brand.
What was different this time was that BitConnect had already revealed its weakness, suffering price drops as the BTC price faltered. BitConnect critics also immediately recognized Davor Coin for what it was, so its promotion was tainted from the start. This, however, still did not prevent potential investors from trying out the scheme. After all, BitConnect had worked for months, and Davor Coin could be the next opportunity, with fresh investments flowing in, all backed by the seemingly endless rise in BTC market prices.
Davor Coin also did a publicity campaign on Instagram, claiming its ICO was so successful, it ended in seconds. Given that users were much more skeptical about ICOs in November 2017, this claim seems outlandish. Yet Davor Coin managed to instill a sense of FOMO, and perhaps swayed investors seeking fast returns.
Why Davor Coin is a Scam
Davor Coin claims to be an honest ICO, which from now on would seek other applications for its DAV digital asset.
And yet Davor Coin was nothing but a reiteration of a Ponzi scheme, wrapped in different housekeeping rules. The scheme could not be mathematically possible, without constantly attracting new inflows of BTC, as well as expecting the price of BTC to appreciate.
That which was most glaring about Davor Coin, is that the community quickly caught wind of trouble, as the price started sliding. But the project leaders tried to calm down fears until the last.
In the end, the “exit scam” was even presented as a positive thing. At this point, no one knows what happens to the Bitcoins that the project gathered – its backers have been only reimbursed with worthless DAV tokens, with a vague promise they may be of use someday. In addition, the last message from the team on the otherwise no-discussion-allowed Telegram channel presented the exit scam as a temporary technical issue with staking coins:
” Due to an overwhelming number of DAV putting into staking, our pool stop functioning correctly. We just released all DAV and we're working to find a solution. The staking pool will be back soon. We're implementing new features to make the blockchain more stable and Davor Coin more valuable.”
So even when busted, Davor Coin continued to claim the project was fair, while its creators ended up hauling Bitcoins.
Davor Coin is itself a copycat scam. But in the latest month, a lot of fast-paced pyramid schemes have tried their luck.
Investors may also try out their luck, especially those who managed to make some money of BitConnect in the early days. At this point, EthConnect and similar platforms have been opened. But the chief warning is that while the classical pyramid may work for newcomers, in the case of crypto Ponzi schemes, a drop in the price of the asset that the project collects creates instant problems.
The silver lining for Davor Coin is that the community moved out first. It looks like at least a portion of the ICO investing community is wising up to the tricks of crypto scammers. Some even blame the fall of Davor Coin on the backers for not trusting the project enough! Crazy, right?!
Why Best Avoid Davor Coin
At this point, Davor Coin is worthless, and no one in their right mind would trade it for anything valuable. But don't forget that even worthless coins are sometimes traded – including, but not limited to Useless Ethereum Token (seriously, LOL), the Confido ICO token, as well as BitConnect.
It would take immense arrogance on part of the Davor Coin team to try to push its digital asset as a means of payment or investment. However, this is not out of the question: older pyramid schemes that were known to the public have restarted. BitConnect itself is concocting the BitConnect X ICO, with daily token allocations.
There has been talks of potential scammers trying to recreate similar schemes on a tight budget:
Adding a whitepaper will cost you about $250 more. You need to be familiair though with how a "pyramid" system works, o and it's for people that like to make a quick buck 😂 pic.twitter.com/IDWFBx2xAU
— Madoff wasn't on the blockchain (@bccponzi) February 8, 2018
In some cases, lending scams have started to transform themselves into fake staking coin scams. The referrals and the pyramid scheme are still hidden in the scheme. And since Davor Coin also has staking on its white paper, it is best to be aware and not fall for promises of high returns.