Rug Pull
When project insiders drain liquidity or abandon a token, leaving holders with near-worthless assets.
A rug pull is a scam where developers or insiders abruptly remove liquidity, mint and dump new tokens, or otherwise exit a project to extract value from holders. It’s common in lightly audited DeFi projects and meme tokens with centralized control over contracts or treasuries.
"The team added and then withdrew most of the liquidity from the DEX pair, causing the token price to collapse and leaving buyers unable to sell—classic rug pull."
Red flags include unaudited contracts, admin keys with sweeping powers, opaque tokenomics, and time-locked promises not enforced on-chain. Safer projects use multi-sig treasuries, renounced ownership, and transparent liquidity lockups.
"Before buying, check if liquidity is locked and if contract upgrades require a multi-sig—both reduce rug-pull risk."
Related Terms
Pump and Dump
→A manipulative scheme to inflate the price of an asset and then sell it to unsuspecting investors.
Liquidity
→The ease with which a crypto asset can be bought or sold without affecting the market price.
Liquidity pool
→A liquidity pool is a smart contract that holds token reserves to enable automated market making (AMM) without order books.
Decentralized Exchange
→A decentralized exchange (DEX) is a platform that allows users to trade digital assets directly with each other, without the need for an intermediary, such as a brokerage or bank.
Token
→Tokens are programmable digital assets residing on a blockchain, often representing a variety of tangible and intangible assets.
All terms and definitions may update as the Cryptionary improves.
