Ways to Detect A Rug Pull

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Rug pull is one of the ways you might lose your hard-earned money in crypto investing. Rug pull is a hostile action in which crypto developers quit a project and flee with investors’ money. Let’s get started on figuring out how to spot a rug pull.

Observe the Layouts 

This isn’t a conclusive indication, but it’s a start. Have you ever noticed how similar the layouts of all the yield farms are? This is because they can easily host their site by utilising the original code from the Goose swap degen yield farm. According to Medium, a degen yield farm can pay participants more than 100% APY. This is significant because the length of time it took to build anything might indicate whether it is a scam.

Did they, for example, recently spend 10 minutes outsourcing fresh photographs, or are they relying on Google Images? Did they spend a few weeks coming up with a completely new design for their new firm, which would aid in the advancement of crypto technologies? Some platforms take months to develop before going live, whereas Degen yield farms can be set up in seconds.

Assess the Liquidity

Assessing liquidity is something you can do only if you’re investing in a single token, not a project. Assessing the level of liquidity, on the other hand, is a very good predictor of how likely a token is to be a scam. Any token with $10,000 in liquidity, for example, may easily be doubled, tripled, or quadrupled in price. However, it also implies that the token’s developer does not have a large sum of money to invest in it. A token like Uniswap, on the other hand, has about $34 million in liquidity. The quantity of value and tokens that may be traded is referred to as liquidity.

Mind the Advertisement

Remember when your favourite influencer told you that HoneyBee or CumRocket were the next great thing and that if you purchased any, they’d match it? This is another strong indication that a rug pool exists. If you pay attention, you’ll find that big influencers are endorsing ventures in which they have no involvement. Good enterprises will spread the word on their own. They will not contact influencers, particularly typical A-list celebrities who are advocating a currency or token that is not Bitcoin or Ethereum. You can also invest in other kinds of cryptocurrencies with Bitcoin Prime – a regulated and beginner-friendly trading platform.

Most A-list celebrities aren’t likely to look at the code that governs how that currency operates, let alone visit the website and read the project’s white paper or plan. You wouldn’t allow these individuals to choose your employment, future stock investments, or romantic relationship, so don’t let them choose your coins or tokens.

Read the white paper. 

Do you realise that when you go to buy a course or a product, everything on that exact sales page has been psychologically evaluated to ensure that it is the most effective in eliciting an emotional buying reaction from you? Solid white papers are a sign of a good project. They provide you with statistics, infographics, and the challenges they are attempting to solve. It’s not a white paper if it’s fewer than 20 pages long. It’s a sales website aimed to persuade you to put your money into anything. But it’s possible that’s your thing.

Inspect the code

Examining the smart contract or token code is one of the most effective techniques to avoid a rug pull. There are a few methods to achieve this, but the easiest approach is to utilise the contract inspection tools in your chosen blockchain explorer.

To begin, go to RugDoc and go through the project. They have a web page dedicated to evaluating smart contract code and detecting typical rug-pulling tactics. They then utilise RugDoc.io to warn people about these frauds. Second, save TokenSniffer.com to your bookmarks. TokenSniffer is a fantastic website that analyses and contrasts a large number of tokens. It’s not unique if the token is 100% or even 80% identical to another token. For rug pools, this is a significant sign. Why make a new token when you can simply copy and paste some code and con some degens?

Compare wallets 

Here’s some advice for which you might utilise a blockchain explorer. Most explorers for the Ethereum, Polygon, or Binance blockchains will let you browse all of the available tokens. You can invest in this crypto here. You may really view a list of all the top token holders who have that token if you enter your token address. You may be getting attacked if one wallet holds more than 20% of the tokens or even if the top ten wallets have more than 20% combined. The concept is that if one individual sells all of their tokens, which amounts to a significant majority of the tokens, the price will plummet. This is perhaps the simplest technique to locate a rug pool.

Know the TVL

When it comes to investing in a project rather than an individual coin, you might look at a metric known as TVL, or total value locked. The entire monetary amount of coins and tokens invested in the project is expressed in TVL. For instance, AAVE, a well-known blue chip borrowing and lending company, has over $20 billion invested in it, compared to CryptoMoonShots, a degen yield farm that just debuted with roughly $100,000 TVL. $100,000 is certainly a significant sum of money, but it pales in contrast to AAVE’s $20 billion and Curve Finance’s $10 billion. We’re going to talk about what to do if you’re in a rug pool. If you detect that your investment is about to be rug pulled, the first thing you should do is remove it. This might be challenging since certain time restrictions prevent you from withdrawing within 48 hours of your original deposit. Second, you should definitely inform the rest of the group about the rug pull. You might be able to share via Discord or Telegram. Finally, you should contact RugDoc to see if they can add the token to their database.

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