Security
Rug Pull
A scam where developers abandon a project after raising funds or draining protocol liquidity.
Last Updated
2026-03-19
Related Concepts
What is Rug Pull?
A rug pull is a scam where crypto developers hype a project, attract investment, then abruptly disappear with user funds. It is one of the most common forms of fraud in DeFi and NFT markets.
How does Rug Pull work?
- Developers launch a token or NFT collection with aggressive social media marketing.
- Users swap valuable assets like ETH or USDC for the new token, building up liquidity.
- Developers either withdraw all liquidity from the pool or use a backdoor function to
mintunlimited tokens and dump them. - The project's website and accounts are deleted, leaving investors with worthless assets.
Why does Rug Pull matter?
Rug pulls cause hundreds of millions in annual losses and damage trust in the broader ecosystem. They highlight the need for audited contracts, doxxed teams, and locked liquidity before investing.
Key features of Rug Pull
- Relies on anonymous teams and unaudited contracts
- Liquidity removal or unlimited mint backdoor are the two main mechanics
- Price crashes to zero within
secondsof execution - No legal recourse for victims in most jurisdictions
Examples of Rug Pull
The Squid Game token crashed to zero in seconds after developers stole over 3 million dollars. Many DeFi yield farms in 2020 were abandoned within 24 hours of launch.