In order for a project to be deemed 'unruggable,' it means that there aren't a significant amount of tokens help by the development team. Creators may also wait for the NFT prices to rise to a certain level before siphoning all the funds from the community. Once the NFT project launches and users mint the collection - usually at a set price - the developers may transfer the funds out of the ecosystem and vanish, effectively executing a NFT rug pull. Many NFT collections also require users to get on the ' whitelist' to be able to mint - further driving the exclusivity of the NFT collection. During the pre-launch phase, the developers and creators behind the NFT collection would seek to attract early ' minters' by excessively promoting it, usually on social media through crypto influencers. In the case of a NFT rug pull, it typically involves a NFT collection, such as a profile picture (PFP) collection. The definition of a non-fungible token (NFT) rug pull is similar to a typical rug pull on a DeFi project.

Then, these developers would list their token and create a pool on decentralized exchanges like Uniswap or Pancakeswap, which allows anyone to do so. The definition of being rug pulled is as such: the developers behind a project would extensively promote the launch of their new project, usually through crypto influencers, and typically make bold promises of 100X returns or more - targeting 'investors' seeking quick riches. This trick is meant to drive FOMO that leads more people to invest in the token. For example, a rug pull coin can move from 0 to 50X within 24 hours. Most reputable projects lock pooled liquidity for a certain period.Īnother major characteristic of a possible rug pull is a coin skyrocketing in price within hours. You must also check if there is a lock on the token’s pool. To ensure you don’t fall victim to a rug pull, check the liquidity in a pool. Note that decentralized exchanges such as Uniswap algorithmically determine the prices of tokens in a pool depending on the available balances.

Crypto locker wikipedia