Rugpulls are one of DeFi’s most common frauds. They occur when a project’s founders depart and liquidate their tokens on the open market.
Scammers exploit the features of a decentralized exchange, known as a DEX, to pull off their rugpulls.
They often pair their token with a real asset for purchase. As their token skyrockets in price due to hype, the founders liquidate their tokens on the market, once they have made enough money from the pairing of the real asset, causing the value of their tokens to crash.
Here are some indicators of a rugpull. One, the yields are too high. Two, the creators remain anonymous. Three, the coin prices skyrocket. Four, there are extensive marketing tactics, and five, there is no liquidity lockup.
