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Foot to Foot #1 Ye Ole Rug Pull
Today's article was written by a fellow Footballer
You’ve been staring at Twitter and you are ready to jump into the next popular DAO or new token launch and the feeling of FOMO is getting your blood hot. Before you throw caution to the wind and dive in head first, be careful! Even those of you who are new to the crypto ecosystem have heard horror stories of recent rug pulls.
Here’s how Coinmarketcap.com defines a rug pull:
a malicious maneuver in the cryptocurrency industry where crypto developers abandon a project and run away with investors' funds.
There are in fact rug pulls going on in every corner of DeFi, some larger than others – but there are tell-tale signs, warnings, and bad omens to look out for which will help you avoid the next $3M+ squid game cryptocurrency scam.
More often than not if something seems off, it is off.
A promise of some new product or token with no real utility (unless it’s a coin with a dog on it of course), should be met with lots of skepticism. Here’s a short list of due diligence:
Do they have a active user base on Discord?
Are they talking coherently or is it a room of what feels like a teenage wasteland?
Is their Discord channel filled with robots or just oddly quiet?
Is there support on Discord/Telegram/etc. that can answer basic questions about their product?
Do they respond to e-mail inquiries?
How old their Twitter account (if they have one)? If it was created this month that would be a red flag.
Do they have clear documentation or intelligible articles with actual content indicating some means towards a solution of some kind that actually makes sense?
Most of these are quite obvious but oftentimes get overlooked and you quickly feel like a lower primate aping into the next “hot” tip from your discord buddy.
And if you’re thinking.. meh, so what – it’s a few hundred bucks, risk comes with the territory. Think again.
A common way to get rugged is simply minting the next popular NFT that is attached to a project promising you access into your newfound wonderland – only after you sign over your private key in what seems like an innocent Metamask prompt and suddenly your wallets drained. Pro tip: If you MUST have that NFT, consider using a new and empty wallet and only the money in it required for the NFT. You can always send it off to your actual wallet after minting - so long as you haven’t fallen off a magic carpet. Then perhaps you use that as your “minting only” wallet moving forward as a safer play.
Ask around, talk to people you trust for an honest second opinion – we’re all in this together and we’d hate to see you shoot yourself in the foot.