Rug Pull
scam · defi
When project insiders drain liquidity or abandon a token, leaving holders with near-worthless assets.
A rug pull is an exit scam where project insiders use control over liquidity, token supply, smart contracts, or treasury funds to extract value from users. It is most common where code is unaudited and admin permissions are concentrated.
Red flags include anonymous teams with no accountability, unaudited contracts, upgrade keys with sweeping powers, opaque token allocations, and liquidity locks that are promised but not verifiable. Transparency and constraints reduce risk but cannot guarantee safety.
Related terms
Pump and Dump
→A deceptive scheme in which promoters drive buying and then sell into the demand they created.
trading · scam
Liquidity
→How easily an asset can be bought or sold in size without causing a large price move.
finance · trading
Liquidity pool
→A smart contract reserve of assets that enables AMM trading, lending, or swaps without a traditional order book.
defi · markets
Decentralized Exchange
→A decentralized exchange (DEX) lets users trade digital assets from their wallets through smart contracts or peer-to-peer settlement.
trading · exchange · blockchain
Token
→A transferable or accountable unit defined by a blockchain protocol, smart contract, or application ledger.
blockchain · asset