What Is Rug Pull? Meaning & Example
Definition
A rug pull is a scam where project creators suddenly withdraw funds or abandon a project after attracting investors. Prices of the affected token often collapse to near zero.
Related terms
DeFi refers to financial services such as lending, borrowing and trading built on blockchains using smart contracts. It aims to work without traditional intermediaries but carries technical and platform risks.
Liquidity PoolA liquidity pool is a collection of tokens locked in a smart contract that traders can swap against. People who deposit tokens earn a share of trading fees but face risks such as impermanent loss.
TokenA token is a digital asset created on an existing blockchain, often using smart contracts. Tokens can represent currencies, voting rights, access to a service or other assets.
What is Rug Pull?
A rug pull is a scam where project creators suddenly withdraw funds or abandon a project after attracting investors. Prices of the affected token often collapse to near zero.
Can you give an example of Rug Pull?
Developers draining a liquidity pool right after a hyped token launch is a classic rug pull.