Article was written by 100xHunters — https://t.me/coins_hunt, community that know how to search, analyze and earn on low cap coins market.
So many rug pulls appeared last time that we decided to write a short article about it.
Disclaimer: it’s just our strategy. Not financial advice. Trade on your own risk.
What is rug pull?
In normal English lexicon, to pull the rug out (from under someone) means to to suddenly take away important support (from someone). In the context of crypto and Decentralized Finance (DeFi), having been rug pulled means to have buy support or Decentralized Exchange (DEX) liquidity pool taken away from a market. This results in a sell death spiral as other liquidity provider, holder and traders sell to salvage their holdings. Typically, it is a new form of exit scamming where someone will drain the pool at DEX, leaving the token holders unable to trade. Example:
How to define rug pull?
- Check contract verification on bscscan.com. Also check hacks/bugs on tokensniffer.com
2. Check % of tokens on different wallets. If significant amount of tokens are in one hands, it’s a rug pull.
3. Compare amount of holders (can find on bscscan) and number of people in community (twitter, telegram, discord, reddit)
If amount of holders is bigger in 3–4 times, than it may be rug pull. Ever if you see that there are no holders with big amount of tokens in one hand, rug puller can distribute tokens between lots of wallets and sell them.
4. Check wallets that sell coins (can be checked on poocoin). If lots of them are connected to 1–2 same addresses, it may be rug pull.
5. Don’t trade tokens with high price or with small volume (<500k$) cause it’s easy to dump them.
6. There are also rug pulls that lock sales (you can buy but you can’t sell). So, check trading history for sales.
7. Check pool activity
If you see owner starts to sell coins, it may be a start of rug pull. Also periodically check wallets with biggest % of coins.
8. Check coin community for rug pull reports.
9. Manage your risks. Divide your deposit on several parts, don’t invest more than 1% of depo in 1 coin.
That’s all. Hope, article was useful for you and you’ll be never rug pulled. If you have any questions — don’t hesitate to ask. Thank you!