Rugpull

Rug pulls are usually split into two broad patterns. A hard rug pull is deliberately malicious from the start: developers bake a hidden function into the token's smart contract, such as a sell restriction that only their own wallets can bypass, then cash out the moment the price has risen enough. A soft rug pull unfolds more slowly, with the team keeping up appearances, posting updates, running social media hype, even shipping minor features, before gradually offloading their holdings and quietly abandoning the project.

On decentralized exchanges, the mechanism usually centers on the liquidity pool that lets a new token be traded against ETH, SOL, or a stablecoin. If that liquidity was never locked or burned, the creators can withdraw it in a single transaction, instantly making the token worthless even though it still sits in holders' wallets. A well-known historical case is the Squid Game token, which surged on hype in 2021 before its contract blocked ordinary holders from selling and the team drained the pool.

• Check whether liquidity is locked (ideally 6-12 months) or permanently burned, not just "locked" for a suspiciously short window.
• Be wary of anonymous teams, unaudited contracts, and sell functions that never get tested before launch.
• Watch for a token that looks like a straightforward exit scam dressed up with marketing rather than a genuine product.

Rug pulls remain one of the most common forms of fraud in DeFi and meme coin markets, causing billions of dollars in cumulative investor losses.