Ever walked into a room, and someone suddenly yanked the carpet from under your feet?That’s exactly what a rug pull feels like in Web3. Except it’s your crypto, NFTs, or tokens that vanish, not your balance.

What is a Rug Pull in Web3?

In Web3, a rug pull is a scam where the creators of a crypto, DeFi, or NFT project suddenly abandon it and take investors’ funds. It often happens after building a lot of hype with slick marketing, active social media, and tempting promises of high returns. Once enough money is invested, the team withdraws the liquidity or disables trading, leaving investors with worthless assets. Rug pulls are common in DeFi (Decentralized Finance) projects and NFT collections because they’re easy to set up and often operate without clear regulations.

Where Did the Term Come From?

The phrase “rug pull” comes from the physical act of yanking a rug out from under someone, making them lose balance and fall. In crypto, it’s the same idea: investors think they’re standing on solid ground, then suddenly lose everything.

How a Rug Pull Typically Works

  1. The Launch – Developers create a new token or NFT project with attractive branding, a flashy website, and ambitious goals.
  2. The Hype – They promote it through influencers, social media, and Discord/Telegram groups to attract investors.
  3. The Liquidity Trap – Investors swap their crypto for the project’s token or NFT.
  4. The Disappearance – The team withdraws all funds from the liquidity pool or abandons the project entirely.

Example: In 2021, the “Squid Game” token skyrocketed in value, then the developers pulled the liquidity, taking millions and leaving holders with nothing.

How to Avoid Getting Rug Pulled

  • DYOR (Do Your Own Research): Look into the team’s identity, past projects, and credibility.
  • Check Liquidity Locks: In DeFi, legitimate teams lock liquidity for months or years to prove commitment.
  • Audit Matters: Projects with smart contract audits from reputable firms are safer.
  • Too Good to Be True? Probably is. Be skeptical of guaranteed high returns.

Beginner Rating: ⭐⭐⭐⭐☆ — Not overly technical, but knowing this could save your wallet.

💡 Pro tip: Rug pulls are one of the main reasons the Web3 rule “trust, but verify” exists. In a space where anyone can launch a token, your best defense is healthy skepticism.

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