If you hang around crypto long enough, you’ll hear the phrase: rug pull. It’s the nightmare of every degen chasing memecoins or farming yield. One moment your token is pumping, the next — liquidity drained, price nuked, and your bag is worthless.
Rug pulls are one of the biggest scams in Web3, and they’ve cost users billions of dollars. Let’s break down how they work, real examples, and how to avoid being the exit liquidity.
What’s a Rug Pull?
A rug pull = when developers abandon a project and run off with investors’ money.
Types of rug pulls:
- Liquidity Rug → Devs drain the liquidity pool on a DEX. Holders can’t sell.
- Mint & Dump → Devs mint a huge supply of tokens and dump them on the market.
- Honeypot → You can buy the token but can’t sell. Classic trap.
- Soft Rug → Devs don’t vanish, but slowly dump tokens on the community.
Real-World Examples
- Squid Game Token (2021): Pumped 75,000% in a week, then rugged $3M. Buyers couldn’t sell.
- AnubisDAO (2021): Raised $60M, devs disappeared within 24 hours.
- Solana Memecoins (2023): Over $100M rugged from retail degens chasing memes.
Red Flags of a Rug Pull
- No Liquidity Lock
- On legit projects, liquidity is locked with services like Unicrypt or Team Finance.
- If it’s not locked → easy rug.
- Anonymous Team with No History
- Memes are often anon, but if the team has zero past projects, be careful.
- No Audit / Fake Audit
- “Audited” but no link to the auditor’s site = 🚩.
- Weird Tokenomics
- Huge taxes (20–50%) or dev wallet holding >50% supply.
- Fake Hype
- Paid Twitter shills, botted Telegram groups, no organic community vibes.
How to Check Before You Ape
- Contract Scanners: Use TokenSniffer or Honeypot.is to detect risky code.
- DEXTools / Dexscreener: Check liquidity, holder distribution, and lock info.
- Etherscan/BscScan: See if one wallet holds a suspiciously large amount.
- Community: Real memes (DOGE, PEPE) had genuine cults, not just bots.
Stats That Matter
- Rug pulls made up 37% of all scam revenue in 2021 (Chainalysis).
- Over $2.8B stolen via rug pulls in 2022–23 alone.
- The majority happened on DEXs like Uniswap and PancakeSwap.
How to Protect Your Funds
- Only risk what you can lose in memes.
- Always check if liquidity is locked.
- Avoid tokens with insane buy/sell taxes.
- Take profits early — don’t wait for the top.
- Use smaller test buys to confirm you can actually sell.
Final Word
Rug pulls are part of the degen jungle. If you play in memecoins and unaudited dApps, you’ll see rugs everywhere.
But you don’t have to be a victim. Check contracts, study liquidity, and never ape more than you’re ready to lose.
The truth? Memes are fun, but rugs are real. Play smart, and you’ll survive long enough to hit the winners instead of just funding scammers.
Wagmi 🚀
