How Rug Pull Scams Work and How Not to Fall Victim ๐ก
Rug pull โ theft of money by the token developers, is common on DEXs (where they control trading) and especially in meme tokens (where they don't need to bother with whitepapers and other details). At some point, the team simply takes all the money and disappears.
3 types of rug pull:
โซ๏ธ Withdrawal of assets from the liquidity pool on a DEX.
โซ๏ธ Changing the smart contract to prohibit the sale of the token.
โซ๏ธ The team/insiders dump all their available token holdings in a short time ๐
What to do:
โช๏ธ In theory, any team with a token on a DEX can turn bad at any moment and take the money, so the best protection is not to use DEXs.
โช๏ธ If the first option is not suitable, gather as much information as possible about the project/team/token/contract and double-check everything multiple times to minimize risk
