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DeFi Deep Dive: Rug Pulls
1. What’s a Rug Pull?
DeFi devs hype a project, then drain the liquidity pool, leaving investors with worthless tokens. In 2024, they took $800 million (DeFiLlama).
2. How It Happens
They launch a token, pump it with fake hype, then pull funds via backdoors in smart contracts—e.g., Squid Game token crashed 99% in 2021.
3. Spotting Risks
- Locked liquidity? Check Team Finance.
- Anon devs—huge red flag.
- Sudden hype with no product.
4. Protecting Your Funds
Stick to audited projects—e.g., Uniswap. Small test investments first—don’t ape in.
5. BlockGuardian’s Tools
Scan contracts with BlockGuardian.xyz—we flag risks. Report rug pulls via our form.
Extra Tips
- Use Etherscan—check token holders.
- Avoid new pools with low volume.
- Watch for dev wallet dumps.
6. Next Steps
Learn Smart Contracts 101 or return to Learn. See our whitepaper.