Ava Labs CEO Emin Gun Sirer warned the crypto community about the emergence of many “junk” second-level solutions that could pose a great danger to investors.

Avalanche co-founder Emin Gün Sirer said that after the collapse of the FTX crypto exchange, a huge number of low-quality second-level projects appeared. The procedures required to run them are quite loose, so there is nothing stopping attackers from creating projects that have no real value. The first “red flag” that signals danger is a discrepancy between the project concept and technology, that is, when marketing tasks cannot be technically implemented.

As an example, Sirer cited projects with centralized sequencers without fraud protection, which contradicts the principles of decentralization and security. Sirer also urged users to be wary if startups conduct token sales simply to raise funds rather than for a specific practical purpose on the network, and called such investments dubious.

The Avalanche co-founder also considers it suspicious if the founders of second-tier projects sell large volumes of native tokens before launch, regardless of motives. You should also refrain from projects whose tokens have a low floating rate, as this creates conditions for artificially inflating the value of tokens and market manipulation. Sirer also advised investors to pay attention to the ethical behavior of project founders and their manner of communication with subscribers.

“Ask yourself: is this project a game changer, can it solve the problems that the crypto industry is facing right now? What opportunities does the project have to solve these problems? Perhaps another bunch of sociopaths are playing a game called “second-level decision” to fill the void left by Sam Bankman-Fried,” wrote Emin Gün Sirer.

Last year, the CEO of Ava Labs said that blockchain and asset tokenization could improve the security of business processes in traditional industries and improve the tracking of ownership.