Is there anyway would explain rugpull for newbies?
Is there anyway would explain rugpull for newbies?
It is inevitable that someone ill-intentioned can create a token and lead many people to ruin with it (SquidGameFakeToken) But where should people look to avoid this when it comes to new tokens, that although some are for malicious purposes there are those who want to do things well.
Its difficult to avoid really organized rugpulls. I honestly learned solidity and made my own tokens and it gave me a good ability to know what to avoid.
Its always good to buy/sell a tiny amount first just to make sure you actually come out with about the same amount at the end. They can tweak the contract to add huge taxes on each transaction and not mention it.
Its also good to look at the top holders and make sure the white paper explains why one account has 30% or whatever.
Investing in small unknown projects is very dangerous. Scams are everywhere. I think it’s almost inevitable that everyone will lose something to a scam. Its important to gauge risk and start with a tiny investment if you’re not sure about something.
Sometimes I’ll buy like $10-20 worth of something just so I’m mentally invested. Then I join their discord and talk to people for a bit and watch the price charts for the project. So far I’ve come out way ahead by being very careful like this. But I have friends who have made stupid money by aping into random things that have hype.
Always look for a white paper, for instance there is a coin that hasn’t rugged pulled yet. “They” no-one knows who issued the token, there isn’t much information online about the token. Whenever you research it; you don’t like what people are saying. For instance, there is one called Ethereum Max. Kim Kardashian, Floyd Mayweather have both been paid to promote the thing. However we know nothing about it. That’s a classic one is to Use the name of something reputable and tag some word like max on the end of it.
Here are questions to ask to avoid a rug pull.
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So is there a white paper?
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What does the token do that sets it apart?
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What is the community saying about it?
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And google what does a search engine turn up and say about it?
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The tokenomics and what percentage’s are going where? Certain amount is going to be going to the creator, a certain amount to the team, advertising, etc.
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Is there a lock-up period for the people holding the coin. When does the locked period end? Say, it’s a significant amount of tokens. These guys could dump all the tokens onto the market at once.
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Centralized exchanges, are the Coinbases, OKCOIN’s, Binance’s of the world selling it.
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Who invented the token? Was it the Russian or the Mexican cartels?
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The gut feeling you get? That could be your best weapon against a rug pull.
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That was off the top of my head. Anyone else can add to this?