2021,"Rug Pull "2021,
It has become one of the types of scams with the largest "annual sales volume" in the entire DeFi field.
"Rug Pull "Just go to the media to search for keywords, and you can get a piece of news:
In layman's terms, it means that the project party runs away.
The New Year is coming soon, and Zhang San, who is worried about having no money to go home for the New Year, thought of a good idea.
He developed a token by himself, put it online on an exchange, and doubled the price of the token by means of pulling the market, and then hired some sailors to go to the community to promote the development prospects of this token (recall , it is estimated that you have encountered it several times).
The project party is deliberately trying to cheat you of your money. Compared with being attacked by hackers, running away as a loss method is almost impossible to prevent.
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SQUID running event
The core of running fraud is to use the unique mechanism of decentralized exchanges.
Let's take the SQUID (squid coin) running away incident as an example, and go through the specific "running away" routine👇
①The squid project first develops SQUID tokens, and at this time the project has a considerable amount of SQUID in its hands.
②The squid project party listed SQUID on an exchange, so that SQUID has liquidity.
③By taking advantage of the popularity of the squid game, the squid project party hypes up SQUID.
④ More and more people bought SQUID, and its price soared at an extremely fast speed, from $0.006 to $3,100, an appreciation of 46,559,900% in less than a week.
⑥After such a blow, the price of SQUID collapsed in a straight line, and the SQUID in the hands of investors became worthless.
How to identify whether the project has the risk of running away?
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As such scams become more common, investors will also lose confidence in the crypto market.
So how to identify whether the project has the risk of running away?
Yield is too high
Although it is not a myth to get rich overnight in the encrypted world, and the rate of return of hundreds of times and thousands of times is not unheard of, but under normal circumstances, this kind of crazy increase often only occurs when the project is just started, and it lasts for a day or two before it ends.
If this surge continues for a long time, then...
Founding team remains anonymous
After all, Satoshi Nakamoto is an example. Generally, project developers who develop anonymously will have two problems in mind: how to cut leeks and how to avoid supervision.
The price of the currency has skyrocketed
In the example of SQUID mentioned above, the price of SQUID skyrocketed without warning. This is the legendary "anti-dumping mechanism", and the project party cut the leeks of innocent investors in this way.
Malicious project parties often choose to gain popularity as quickly as possible, so that they can cash out quickly.
Substantial promotion and marketing
If the project party swipes the screen on platforms such as Twitter and Telegram, then you can prepare to slip.
no liquidity lock
Some high-quality projects are "self-proving innocence" and will adopt some methods and mechanisms to restrain themselves.One of these mechanisms is the one that CertiK explained to you before。
time lock
It's like a promise from the founding team - that the tokens held in the smart contract cannot be accessed or sold for a predetermined period of time.
Time locks cannot prevent 100% of project fraud, but if the project you invest in is unwilling to set a time lock, then you'd better run away.
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What can you do to avoid falling into a running scam?
CertiK has published two articles on project fraud, please click to read:
Dry goods sharing | How to accurately identify the project background to avoid fraud by the project partyRegarding the 10 hard-core guidelines for avoiding project party fraud, CertiK has integrated most of its security verification functions intoCertiK Skynet dynamic scanning system
——A dynamic scanning system that can help users identify and flag malicious vulnerabilities before they occur.
check liquidity
We can identify the risk of the project party by checking the liquidity of the project.The following figure is usedInsights section.
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Take SHIB's liquidity index as an example
As shown in the figure above, SHIB/WETH is the largest trading pair of SHIB, and the number one address (0xa677...c87097) occupies nearly a quarter of the liquidity of the SHIB/WETH pair.
Long-term SHIB holders are better off paying more attention to this information.
Review Github, whitepapers and social media
A quality project👇
①The white paper must include various problems faced by the project and how to solve them.
②Recently, it has been updated on Github.
③Social media promotes the project truthfully, rather than vigorously advocating the price of tokens.
Confirm team credibility
Checking whether the project party is anonymous is an important way to evaluate its credibility.
Some people may ask, isn't the founder of Bitcoin also anonymous? But Bitcoin is the original decentralized cryptocurrency in the true sense, are other projects?
Another principle is similar to "star endorsement".
As the encryption world continues to develop, security and credibility are further established, and more and more leaders have invested in this field, including Web 2 pioneers and professors in related computer science fields, such as Emin Gün Sirer of Avalanche and The two co-founders of CertiK.
If the founding team of the project party is a leader with a high reputation in a certain industry, then he will most likely not take actions that affect his reputation.
So in order to go home and have a good year, you must also remember to "do your own research"!
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