A rug pull is a scam in the crypto world where project creators run away with investors’ money. It’s like paying for a meal at a restaurant, but the chef takes your cash and disappears before serving anything.
This trick happens often in DeFi (Decentralized Finance) because anyone can quickly create a token and start selling it without strict rules.
How Rug Pulls Happen
Scammers use different methods to steal money:
1. Emptying the Liquidity Pool
Crypto tokens are often traded on decentralized exchanges like Uniswap or PancakeSwap.
To make trading possible, the creators put their tokens and other crypto into a “liquidity pool.”
When the token price rises and more people invest, the scammers remove all the funds from the pool.
The price drops to near zero, and investors are left with worthless coins.
2. Tricking the Smart Contract
Some scammers add hidden code that allows them to:
Make unlimited tokens and flood the market.
Block investors from selling (called a “honeypot”).
Take tokens directly from wallets.
This can be hard to detect unless the code is checked by experts.
3. Vanishing After Building Trust
Scammers sometimes gain trust through social media, influencers, or big promises.
Once they collect enough investment, they shut down websites, delete accounts, and disappear.
Warning Signs of a Rug Pull
Anonymous Team No names, no accountability.
No Audit Safe projects usually get their code checked by a trusted company.
Unlocked Liquidity If funds aren’t locked, they can be taken anytime.
Too-Good-To-Be-True Promises –Guaranteed huge profits usually mean trouble.
How to Protect Yourself
DYOR Read the project’s plan, check token details on the blockchain, and see if the creators have given up control of the code.
Check Liquidity Locks – Locked liquidity makes it harder for scammers to run away with funds.
Look for Audits – Find recent audits from reputable security firms.
Stick to Trusted Platforms – Use exchanges or launchpads that review projects before listing them.
Final Tip:
Rug pulls are common, but you can avoid most of them by staying alert and questioning everything. Only invest what you can afford to lose, and never rely only on hype or promises.