$ETH

🔥 What's Rug pull?

A rug pull is a type of scam in the cryptocurrency and DeFi (decentralized finance) space where developers create a project, attract investors, and then suddenly withdraw all funds, leaving investors with worthless tokens. This is a common exit scam in crypto, especially in new or unregulated projects.

Types of Rug Pulls:

1. Liquidity Theft: Developers remove liquidity from a decentralized exchange (DEX), making it impossible for investors to sell their tokens.

2. Dumping Tokens: Developers pre-mine a large supply of tokens and sell them all at once, causing the price to crash.

3. Honeypots: The smart contract prevents investors from selling tokens, but developers can withdraw funds freely.

How to Avoid Rug Pulls:

Research the team: Anonymous or unknown developers are a red flag.

Check liquidity lock: Ensure liquidity is locked to prevent sudden withdrawals.

Analyze smart contracts: Look for backdoors in the code that allow the creators to manipulate funds.

Avoid projects with extreme hype: If a token promises unrealistic returns, it’s likely a scam.

Would you like an example of a famous rug pull case?