Catastrophe Theory: Dodge the Next Rug Pull
Meme coins are constantly increasing in number. Dozens of new ones appear every month, attempting to imitate the success of DOGE, SHIB, and ELON. Promises of early adoption tempt people to take higher risks than they can possibly afford.
But sometimes, crypto projects don’t have your best interests in mind. A malicious group of founders can run away with the money, leaving holders with nothing. That’s why it’s so important to consider your purchases – don’t gamble; learn as much as you can beforehand.
Read Your Tells
When it comes to crypto scams, there are many indicators you could use to assess the legitimacy of any given coin. But no single one is perfectly reliable. It helps if you compose a checklist, so it can be reviewed quickly before your final decision.
Try to react to suspicious developments. Even if every sign was good so far, certain moves should put you on high alert. For example, an offer to lock your funds (in exchange for massive benefits or security) is often the sign of an upcoming dump. As was the case with SQUID.
Small, recently-started projects are, obviously, a greater risk than the leading giants. Even if it’s a rug pull, a bigger project requires massive investment from the developers (for instance, a PR article could cost thousands of dollars). Before it’s recuperated, there’s no reason for the scammers to pull out.
Anonymity and low-effort PR reflect insufficient investment. If the founders believe in their coin, why would it be underfunded? In the best case, it’s just a flop, unlikely to compensate the investors for their time. Otherwise, you can expect a quick rip-off – an attempt to cash in on early buyer FOMO.
Along with the aforementioned negative indicators, there are positives to look out for. First of all, a realistic roadmap and a clear whitepaper are given. Don’t even think of buying before you go through the document! It’s worth taking a look at the audits – reports from Solidity.finance, SolidProof, and other reputable services will decrease the likelihood of a scammy ending. In fact, the developers don’t have to stop on a single audit – some projects amass several even before they’re deployed (Scrooge Token comes to mind).
A locked liquidity pool will outright prevent the scheme. It will ensure that the resource pool, which consists of stablecoins, can’t be drained by the coin’s creators. This is a temporary measure, lasting about 5 years, and safety is almost guaranteed for the duration.
Finally, being hosted on a popular tracking site can add a lot of trustworthiness to a coin. It’s not a guarantee by any means, but only one out of hundreds of competitors will manage to get onto a site like coinmarketcap.com.
Remain Rational
There’s no such thing as a free lunch. Crypto is a miracle, it has made people rich, but it made a lot more of them broke. Temper your expectations, avoid shady schemes. And finally, when every risk has been accounted for, with everything checked and secured… Never use more money on crypto than you’re prepared to lose.
