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What Are Rug Pulls and How to Avoid Them

1. What’s a Rug Pull?

A rug pull is a DeFi scam where developers hype a token, then drain the liquidity pool and disappear, leaving investors with worthless coins. In 2024, rug pulls cost $1.2 billion (CertiK).

2. How They Work

Fake Hype: Social media pumps a “new gem.”
Liquidity Trap: Funds pooled, then withdrawn.
Exit: Team vanishes—token crashes.

3. Red Flags

Anonymous team or no audit.
Huge “locked liquidity” claims—unverified.
Low transaction history on the contract.

4. Avoiding Rug Pulls with BlockGuardian

We help you spot them:

Address Checker: Verify tokens at blockguardian.xyz—new or inactive? Suspicious.
Extensions: Warn on risky txs—get via email.
Community Alerts: Report rugs via form.

5. Stay Safe

Check contract age and activity.
Avoid unverified pools.
Use BlockGuardian before investing.

6. Dive Deeper

See our Scams Guide or return to Learn. Read the whitepaper.