Recently, I’ve again seen people in the community asking about rug pulls, and I think it’s necessary to talk about this topic properly. This kind of scam isn’t anything new in the crypto market anymore, but many newcomers still keep falling for it again and again.

Rug pull, literally, means “pulling the rug.” It refers to the project team suddenly yanking the rug out from under your feet while you’re still standing on it. So how does it work exactly? Usually it goes like this: someone creates a new coin, hypes it up wildly—throwing everything on top, like DeFi platforms, metaverse, meme coins, and all kinds of concepts. Then they list a liquidity pool on exchanges like Uniswap, using marketing and hype to attract retail investors to jump in. When the price rises and liquidity accumulates to a certain level, the project team directly withdraws all the money from the pool, and the coin price instantly crashes to nearly zero. Investors are left with a bunch of worthless tokens.

This kind of rug pull also has different variations. Some are one-time schemes where the team steals the money and runs, while others slowly and gradually extract liquidity, leaving victims unable to react in time. There’s also a more covert one: developers leave a backdoor or admin privileges in the smart contract, which lets them change rules, freeze funds, or pull liquidity at any time.

Are you asking about Squid Game Token? That’s a classic case. This coin launched riding the popularity of Netflix’s hit series, and at one point the price surged to 2800 USD. Then, overnight, the project team disappeared and the liquidity was drained. Similar incidents have happened countless times in DeFi—each time leaving behind a new batch of victims.

From my own experience, if you want to avoid falling into rug pull traps, you need to develop a few habits. First, check the project’s smart contract code—ideally have a reputable auditing firm perform an audit. Second, see whether the liquidity is locked; if it can be withdrawn at any time, that’s a huge danger signal. Third, look to see if there are real people behind the project, or if it’s all anonymous accounts. Fourth, be especially wary of projects that promise huge profits and have price increases that are particularly fast.

To be honest, the risks in the crypto market are hidden behind every attractive promise. The bigger the promise and the faster the rise, the greater the risk is usually. We can see all kinds of projects on Gate, but remember: doing your homework is much safer than mindlessly chasing hype.