As of writing this article, Grimace Coin has donated dog and cat food to charities and provided McDonald’s meals to homeless people in their area. If it’s a ‘hard’ rug pull where the liquidity is drained overnight, then more often than not, it might give investors a cause of action to file a case. If it’s a ‘soft’ rug pull, then it’s often hard to establish the exact intention of the team in slowly draining the funds; whether it is for the development of the project or a planned exit strategy. The simplest way to see if a token or project is likely to rug pull would be to monitor the social media and on-chain wallet activity of the team. If there seems to be a lot of hype but no real utility or goal outlined, then it’s highly likely that the token would rug pull. This method allows the token price to keep pumping upwards at a rapid pace as only buy orders flood in.
Always make sure the liquidity provided by the developer in a liquidity pool is locked. You can easily find this information by entering the contract address of the token on websites like Token Sniffer or Crypto Watchtower. If the liquidity position is not locked, it means that the funds are susceptible to being withdrawn at any time, resulting in a rug pull through the ‘liquidity stealing’ method. The developers of a project are typically the biggest contributors to a liquidity pool, this means that a large portion of the assets in the pool can be withdrawn by them. Keep in mind that when developers launch liquidity pools, one of the two tokens in the liquidity pool is created by them, meaning it’s zero cost to fund that side of the pool.
- Over the course of 2021, scammers rug pulled a total of $2.8 billion, or $7 million per day, according to blockchain analysis firm Chainalysis.
- Unfortunately, the project was a honeypot that limited the sell orders to only specific wallets owned by the team.
- Pull-through production utilizes a pull system, a method for controlling the flow of resources through a system.
- This is because cryptocurrency holdings are taxed in the same way as any other assets you own, such as stocks and property.
Interestingly, at the time the authorities charged them, both Ethan and Andre were already making a move for the next NFT project called ‘Embers’. If they weren’t charged, this project would have also most likely ended up as a rug pull. To track the founders, the investigation team issued subpoenas to Discord, the platform on which the project was quite active. Discord then disclosed the IP address on which the founders’ usernames were active on. The team then found a Coinbase transaction that happened on the same IP address.
Limiting Sell Orders
At the optimal time, developers unload their shares and jump ship, plummeting the token’s value for remaining investors caught off guard. A more covert tactic involves blocking or limiting a users’ ability to sell coins on a trading seesaw protocol rug pull platform, which can be manipulated at any point in time. Once an exchange has attracted a substantial amount of traffic, backend fraudsters may amend a project’s code to only grant traders the ability to buy into a platform.
Seesaw Protocol (SSW) — Connecting BNB Chain, Polygon, and Ethereum
Although these methods appear to be in opposition to each other, they are not mutually exclusive. In fact, they are often the most effective when applied strategically together to address individual business scenarios. A push, or made-to-stock (MTS) strategy, refers to the more traditional model of trying to match production with consumer appetite via forecasts, seasonal-demand planning, and historic trends. DeFi can and is quite rewarding for many users, assuming they pick the right projects.
This is because cryptocurrency holdings are taxed in the same way as any other assets you own, such as stocks and property. In simple terms, this means that the audit of Seesaw Protocol is likely to be completed after its launch or once the pre-sales have ended when the transactions come into fruition. Seesaw Protocol will allow retail players to enter the financial system through the cryptocurrency route.
Supply chain production has received new attention in the 21st century because of the advanced IT technology that’s now available and that can link and manipulate various aspects of a supply chain. Information technology (IT) makes it very easy for a vendor to shift from a push-type model to a pull-type business model. Hence, pull-through production has vast implications for online merchants and the e-commerce industry. Basing purchase orders and production schedules on actual, rather than anticipated, orders can lead to lower outlays on storage, factory overhead, insurance, raw materials, and finished goods. Pull-through production might also enable a company to cost-effectively tailor an item to a customer’s specifications, potentially driving customer loyalty. Tesla, Elon’s electric vehicle firm, was said to have over $2 billion in bitcoin at the end of 2021.
Beyond the structured avenues for rug pulls that exploit technical vulnerabilities, the term “rug pull” has a softer, more generalized usage in the crypto community. In the dynamically evolving crypto landscape, safeguarding your investments against DeFi scams such as rug pulls has become increasingly important. Essential tools like the De.Fi Scanner, a potent rug checker for ETH, BNB Chain, and 10+ https://1investing.in/ of the most popular EVM DeFi networks, can simplify this battle and help keep you safe from the most dangerous exploits. Pull-through production is an inventory management method in which products are manufactured based on actual demand, as in custom or made-to-order (MTO) inventory. That means that the impetus for a product being made, or purchased, begins entirely with the customer’s order.
This is where the first method of rug pulling called ‘liquidity stealing’ comes in. Once the token has achieved a high enough price, the malicious project developer can exit the scam by pulling their share of the liquidity pool. This method of rug pulling is usually classified as a ‘hard pull’, which means that the intention to rug the project was clear from inception.
Interpret the report
Whether scammers choose to cap sale amounts or rewrite code that wholly reconfigures a native token’s viability, the end goal will always be to run with the highest amount possible. Adding distrust in a market already plagued by volatility, con artists are part of what categorizes crypto — and the DeFi ecosystem at large — as a digital Wild West. Beyond our antivirus suite, you can actively improve your security knowledge through our REKT Database, Audit Database, YouTube channel, and De.Fi Security X profile.
Unfortunately, the project was a honeypot that limited the sell orders to only specific wallets owned by the team. This meant that while investors could buy the tokens, they were unable to sell them back on the market. The platform initiated the rug pull by ‘temporarily’ closing the platform to address an “abnormal fluctuation in the company accounts.” This froze users’ access to their funds on the platform. In the meantime, its founder and CEO Faruk Fatih Ozer absconded to Albania with over $2 billion of user deposits with him. He still remains at large and has an active international warrant seeking his arrest.
De.Fi Rug Pull Checker: How to Scan for Exploits
Funds can be used to farm and take advantage of the margin and loan facility. In the future, Seesaw Swap aims to add options for other blockchain networks offering a complete package for all its users. According to the official whitepaper, the project is currently being onboarded for audit by CertiK. However, at the time of this writing, the audit itself hasn’t been completed, which means that there’s no official security assessment of the Seesaw Protocol.
Make sure the project you’re planning to invest in has undergone an external audit from a reputable company. This will help uncover any vulnerabilities in the smart contract of the token. Now that we’ve learnt the different methods of rug pulling, let’s discuss how you can protect yourself from falling for them. One of the popular examples of this type of rug pull is the ‘Squid Game’ token rug pull (which we’ll read more on later).
The De.Fi DeFi dashboard stands as a beacon of security, offering an arsenal of tools and resources tailored for web3 users to fortify their defenses against the nefarious underworld of crypto scams. Pull-through production is a just-in-time (JIT) manufacturing strategy that sends an item into the production process at the point when a company receives an order for it. Pull-through production utilizes a pull system, a method for controlling the flow of resources through a system. Resources are pulled into the production pipeline only as they are actually needed or requested.