A rug pull is a scam in the crypto-assets domain where the developers of a project suddenly withdraw all the funds invested by users, leaving the token worthless. It is one of the most common types of scams.

The rug pull often occurs in the following contexts:

• Launching a token or a DeFi protocol without verified code,

• Liquidity locked on a decentralized platform (DEX) like Uniswap,

• Massive token sale by creators after generating FOMO.

Why it’s a problem:

The rug pull undermines investor trust, causes significant financial losses, and damages the overall image of the crypto ecosystem, especially among newcomers.

Types of rug pulls:

• Hard rug pull: the founders flee with the funds.

• Soft rug pull: massive dumping of tokens without officially fleeing, but with the same effect on investors.