Rug pull

A rug pull is an exit scam in which the people behind a token take the money and disappear. The project can look normal for days or months, with a website, an active chat, and a rising chart, and then the value collapses because the creators removed whatever gave the token a market. The name comes from pulling the rug out from under everyone standing on it.

There are a few common mechanics. In the classic liquidity rug on a DEX, the creator pairs a new token with ETH, SOL, or a stablecoin in a liquidity pool, buyers swap into it, and then the creator withdraws all the paired asset. The pool is left empty, so nobody can sell. A second version is the supply dump, where the team or insiders hold a large share of tokens and sell into the pool until the price is near zero. A third relies on contract code, such as a mint function that lets the owner create unlimited new tokens, or a hidden rule that blocks everyone except the owner from selling.

It matters because blockchain transactions cannot be reversed and there is no support desk to appeal to. Once the liquidity is gone, the token usually has no real market, and the stolen funds are often moved through fresh wallets within minutes. Brand-new, low-cap tokens on any chain are the most exposed, since launching one costs almost nothing and anyone can do it.

Some checks lower the risk, though none remove it. See whether the liquidity is locked or burned, for how long, and whether the lock covers the actual trading pool. Look at the top holders in a block explorer: a few wallets holding a large share of supply, or a still-active deployer wallet, is a warning sign. Read what the contract allows, including minting, pausing trades, changing taxes, blacklisting addresses, or being upgraded behind a proxy. An audit can catch code problems, but it says nothing about whether a team will sell, so a small test sell before buying size is a cheap extra check.