The same applies to blockchain in general. If a new layer-1 is released you audit the code, the token supply, distribution - if its not put out clearly to you its suspicious, otherwise you go through the same process. Those who can read first hand what the risks are can get in early, those who cannot wait. Its not rocket science.
If you cared so much about fraud victims, you would drill into new, atomic contracts and protocols, but instead you take the lazy, spiteful approach of calling the whole space a fraud and expect people to believe you because you work with computers. Can you fix my printer while you rationalize your position?
Being readable will not stop bugs. This is the history of software engineering. Heartbleed went unnoticed for years, for instance. Putting the onus on the participants to verify a bug-free smart contract is kind of absurd if you ask me. It's just not possible and definitely won't scale.
In society there are incentives for example for a bakery to not poison you. The obvious one is the financial gain, reputation, but also the threat from not following laws, regulations. There are health inspections and so on. Even with that a lot of things a bakery sells is not healthy for you.
It doesn't matter how smart the tools are, if the only incentive is to defraud people, which is how the crypto economy works today. It's all lions and hyenas, and there is no algorithm to fix that, if anything decentralized consensus makes it easier for people to obfuscate and shrug responsibility.
A blockchain is like having an append-only log in someone's house. Everyone can look at it, nobody can erase from it, and everyone can buy an expensive pen to create a new entry. The people who own the house can replace the log with an older copy if they wanted to, if they don't like the new entries for example, which is what happened to Ethereum, but the real opportunity is not compromising the blockchain, it's running scams with it and on it. With no oversight, no fraud detection, no customer protection anything goes. All the blockchain can do is setting the fraud in stone.
We already have better cryptographic tools for verifiability supporting transparency and censorship resistance, and they are much faster and more pratical.
You can't replace existing things with a Merkle tree and proof of whatever consensus, because the powerful will always have more of that whatever. Once they do you get a centralized system worst than any existing one.