Investors’ biggest worry is rug pulls like the Squid Game, OneCoin, and Luna Yield. Because decentralised finance (DeFi) and cryptocurrencies are now thriving businesses, many scammers and unethical actors have targeted them.
Among crypto aficionados, the expression “do your own research” (DYOR) is well-known. However, there is a lack of clarity regarding what this entails since one must consider how one can conduct research when they are unsure of what information is genuine and what is not. Other issues to consider are: What are the signs and symptoms of rug pulling, and how can you identify their supporters?
We’ll go through some of the most common red flags in crypto projects as part of this conversation, so you can avoid being a victim of the next fraud.
Understanding how rug pulls work is essential
To put it another way, after investors have committed sufficient monies to the project, developers cash out and vanish. In the majority of cases, they are low-effort businesses orchestrated by an unknown individual with a bad purpose.
In other situations, they are identical clones of other cryptocurrencies or initial coin offerings (ICOs), with minor variations in Telegram’s community name. After then, they’ll link you to a new contract address, and you’ll be able to say goodbye to your money. Nonetheless, we may categorise rug pulls based on how they work:
- Liquidity Is Being Stolen
- Taking away people’s ability to sell tokens
- Developers are making money.
Steps to #MakeCryptoSafety for Developers
Examine a Variety of Tools
Several websites keep track of the latest hacks and pump-and-dump scams. For example, Market Move automates token audits while also analysing smart contracts and liquidity.
Make Use of the Correct Platforms
CrypTalk, for example, will aid in the discovery of legitimate projects, the verification of teams, the encryption of discussions, and the examination of reports and market capitalization. Projects and developers should be able to coexist in a secure environment. With many levels of encryption, the CrypTalk software fills an important market void and restores market confidence.
Explorer of the blockchain
For fraud detection, a blockchain explorer such as Etherscan or Binance Smart Chain is required. You can locate the token tracker page, the complete supply, the total number of holders, the total number of transactions, and which wallets possess the most tokens when you search a cryptocurrency’s token address.
Make Your Own Investigations
Examine the whitepaper, check out the smart contract, and discover more about the team and the developer’s history. Examine the route map and discuss your findings with others. We can’t emphasise the importance of DYOR enough; it’s a good habit to have and should never be abandoned.
Look for Red Flags
- The project arose out of nowhere.
- Developers that choose to remain anonymous
- Liquidity is low.
- Liquidity Has Been Unlocked
- Locked at a low total value
- Token Distribution inequitably
- Website with Low Effort and No Social Media Presence
- There will be no audits.
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