Understanding Rug Pull and Types || 10% payout to tron-fan-club.

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Introduction

Finding a sector in the world where there is no fradulent activity will be one out of 10,corruption is fast eating into every sector. Crypto is no exception. The advent of crypto promises something better especially if you really know what you're doing. Losses generally in crypto is sometimes inevitable in this journey but I believe there are some losses that can be avoided if we take our time to study and engage in deep research. Sometimes we are blinded to the dangers ahead,ignoring the red flag but fixed our gaze on a profit or gain wrapped in illusion. This is why many of of fall victim of scams that we could have avoided. Today we will be looking at a concept called RUG PULL in crypto and the blockchain world at large.

What is Rug pull

The definition of this term is Just as the name implies. Just imagine yourself standing on a rug with a feel of luxury and comfort then all of a sudden it was forcefully snatched from your feet while you stood on it. The result it that you could fall and even injure yourself. The same rug you stood on that gave you comfort now causes you pain.

Same is the case with Rug Pull. Rug pull is an act carried out by fraudulent cryptocurrency developers who come up with a coin or token and ensure they pump the coin to attract investors and then practically get all the value there is in that coin and then take off with it. They practically dump the token and leave investors with almost nothing.

One has to be careful when investing in tokens or coin that pumps without reasonable cause. Many of these cryptocurrencies are pumped by these malicious folk just to scam people of their hard earned money. You won't be wrong to say rug pull is a type of exit scam in the crypto space.

A popular example of this act is one that happened just recently called squid token. It funny and interesting how people become gullible and emotionally driven or attached to things without value. The squid token came into existence just after the squid game movie gained prominence and became the most sought after movie.

Many immediately went for that token because the hype was still there,there was alot of discussion around the squid saga so they felt they could just invest in it without DYOR. The developers eventually took off with the money invested by investors such that the token went down to zero.

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We can see from the image how the coin pumped so hard only for it to drop to nothing with over $2.1 million gone

Types of Rug Pull

It also important to mention that there are two types of rug pull. We have the soft rug pull and the hard rug pull. Let me take us through these terms quickly.

• Hard Rug Pull

A hard rug pull is a subtle kind of rug pull where developers of a project maliciously code their softwares to defraud their investors. It is not easily seen on the surface investors would have gotten deep into it before they realize. Sometime to detect this,you might need to use a very little amount of your token to run a test on the project. A very good example of this rug pull is liquidity stealing.

• Soft Rug Pull

Soft rug pull sounds soft but he meaning is different form the way it sound. A soft rug pull occurs when the developers team or founder dumps the asset they created after milking all the value there is from it. Here there is no plan to set up malicious code. The plan here is to pump the coin,attract new investor and then run away with their money.

Conclusion

Rug pull experience is not really a pleasant experience. That is why one must really be careful when trying to invest especially in project (coin) that pumps for no serious reason. When a coin pumps for no just cause,it is the team behind it that is at work. They are all out there to steal. I will be sharing in my next post how to detect these scam project and save one's self from a planned rug pull.

Best Regards:
@lhorgic♥️