Rug Pull Explained: How Rug Pulls Work and How to Spot Them in Crypto
The process generally involves: Creating a meme token with a defined supply and minting authority. Adding liquidity to a decentralized exchange pool to allow trading. Pumping the token price through marketing or hype. Suddenly removing liquidity or selling a large portion of tokens (the "rug pull"), crashing the price. Liquidity Not Locked: Legit projects lock liquidity in smart contracts for a set period to prevent developers from withdrawing funds. Anonymous or Unknown Developers: Lack of transparent teams increases risk. Unusual Token Supply Changes: Sudden minting or burning of tokens without clear reasons.