Understanding what rug pull means in crypto and how to avoid it

_{In every sector of the economy, there are ways in which people are being scammed which one needs to know to avoid being scammed. In the crypto industry, some developers with bad intentions will come to scam the public by hyping their projects which will make you think they are legit, whereas the aim is to scam you. In this post, "rug pull" is the topic of discussion.}

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What rug pull mean in crypto

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"Rug pull" is the way through which developers scam people by pumping the price of their token or hyping their project before going away with people's investment (funds) without adding liquidity to their token. Simply, put rug pull is a scam that is carried out by crypto developers who will create tokens and pump the price of the token to attract investors before disappearing with investors' funds leaving investors with worthless tokens that have no value.

In the crypto industry, one has to be smart enough to avoid being scammed. Rug pull happens when fraudulent blockchain developers create their cryptocurrency token, pump the price of the token, and tell investors to buy the token via IDO with a promise of listing the token which will never be fulfilled. Rug pull has been happening in the crypto industry and many people have lost their hard-earned money to fraudulent developers.

Just like in the case of Cakecore that went away with investors Core after promising 100% ROI in staking which also hype the listing of the token which hasn't been fulfilled to date leaving investors with a worthless token that has no liquidity.

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Types of rug pulls

Rug pull can be soft or hard pull all of them are classified as scams in various ways which this post has discussed about them one after another. However, before looking at the soft and hard rug pull below are the three major types of rug pulls that happen in the crypto industry which you need to be aware of.

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• LIQUIDITY STEALING RUG PULL:

This is the type of rug pull that happens when the developers of the tokens empty the liquidity pool. In simple terms, it is when a fraudulent token developer withdraws all the coins that are in the liquidity pool. Once liquidity has been removed the price of the token will fall to zero leaving those who have invested in the token with nothing.

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• LIMITING SELL ORDER RUG PULL:

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In this type of rug pull investors can't sell their tokens only developers based on how the code is run by the fraudulent developers. What fraudulent developers do is wait for investors to buy their token using crypto paired to make the price of the token rise before selling (dumping).

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• DUMPING RUG PULL:

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This is the type of rug pull where fraudulent token creators would sell their holding of the token in large quantities. Before dumping occurs there is usually a hype in the tokens.

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How you can avoid rug pull in the crypto industry.

Rug pull mostly happens in a project that is still new and people believe when they invest they will get a good return in the future. However, here you are going to learn how to avoid rug pull.

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• Try to be skeptical when you hear about a new project:

Most of the new crypto and NFT projects you are hearing about are not actually what you think they are. You need to be sure about a project before investing what you can afford to lose. Don't be too fast to invest.

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• Try to be patient:

Before investing your hard-earned money into a new project you need to calm down and do your finding and you shouldn't see it as something that if you do not invest you can't invest again even after listing the token. Don't be in a rush to invest when you haven't done your research concerning the project.

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• Avoid new projects with a high interest rate:

Don't be carried away with the high interest rate a new project is offering as it is a way of hyping the project so more investors can come in before disappearing. A legit project will never allow you to earn 100% of your capital back.

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• Do you research:

In the crypto industry, everything is all about you staying anonymous, which is why people are scanning others. Before investing in a new project you need to ensure that you have gathered useful information concerning the project first.

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Conclusion:

_{Thousands of investors including myself have been scammed via rug pull which is why I don't want you to be scammed by investing in a fraudulent project. Staying safe gives one the peace of mind to go about his/her activities than when he or she is being scammed we have learned how to avoid rug pull scams in this post.}

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