What is RUGPULL?

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30 May 2022
30

What a phrase to look out for in the crypto space.

Scamming has significantly been a part of human existence right from the beginning, one might be forced to think, how did we get here, but that is a story for another day.

What then is RUGPULL?

Rugpull in a simple term is crashing of a token price from what ever price it was to zero (nothing), whereby leaving investors or liquidity providers with nothing but a broken heart, loss of funds etc.

In most cases, it can be termed as an abandon project

Most cases, RugPull occur with withdrawal of a huge percentage of liquidity from the liquidity pool which in turn drives a token price from hero to zero.

You must note, there are a lot of factors that may contribute to rugpulls, 

  1. A hack
  2. A malicious token DEV
  3. FUD etc


All these factors are sole contributors to the occurrence of a rugpull.

Rugpulls has made CEXes have an edge over DEXes, since CEXes ensure that a token is being audited before it is being listed, unlike on DEXes where any token can be listed for trading.

Conclusion

Before investing in a token, ensure to DYOR else, what ever befalls you, is definitely on you.

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6 Comments

B
Napes
Thanks for the explanation. Very interesting to know.
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