Rug Pull
A crypto scam where developers abandon a project and steal investor funds — typically by draining liquidity pools. The financial equivalent of pulling a tablecloth out from under someone's dinner.
Lab Classification
Specimen type: Predatory financial event / scam taxonomy First observed: ~2020, DeFi summer Current prevalence: Persistent; evolves faster than countermeasures Contagion vector: Token launch → liquidity injection → hype cycle → drain → silence
Mechanism of Action
A rug pull operates with the precision of a magic trick, except the only thing that disappears is your money. The standard protocol:
- Deployment — Create a token. Give it a name that references a popular meme or trending topic. Add a logo that took eleven minutes in Canva.
- Liquidity seeding — Provide initial liquidity to a DEX pair. This creates the illusion of a tradeable market.
- Hype injection — Flood Telegram groups, Twitter spaces, and Discord with promises of “100x easy” and “dev is based.” Pay influencers. Create fake partnerships.
- Accumulation — Let retail buyers drive the price up. The chart looks good. The vibes are immaculate. Everyone is typing “LFG” in the chat.
- Extraction — Remove all liquidity. Sell all dev tokens. Delete social accounts. Change Telegram to read-only. Post one final message: “sorry guys, market conditions.”
Total elapsed time: anywhere from 6 hours to 6 months.
Taxonomy of Rugs
Not all rug pulls are created equal. Laboratory analysis identifies several sub-species:
- Hard rug — Liquidity drained entirely. Token value goes to zero. No ambiguity about what happened.
- Soft rug — Developers slowly sell holdings over time while maintaining the appearance of an active project. Death by a thousand paper cuts.
- Honeypot — The smart contract allows buying but not selling. Victims discover this when they try to take profit. There is no profit.
- Slow rug — The project technically still exists. Updates get less frequent. Roadmap milestones slide. One day you realize the last Discord message was from seven months ago.
Cultural Forensics
The rug pull has become such a defining experience of crypto culture that it’s generated its own subgenre of Wojak edits — the pink Wojak clutching a phone, watching a chart crater to zero. The phrase “I got rugged” carries the same resigned energy as “I got food poisoning at that gas station” — everyone warned you, you went anyway, and now you’re telling the story like it was inevitable.
The This Is Fine meme finds perhaps its most natural habitat in rug pull aftermath Telegram channels, where remaining holders convince each other that the dev “just needed a break.”
“The rug pull is crypto’s version of natural selection. It doesn’t make it less painful. It does make it less surprising.” — Field notes, DeFi summer 2020
Diagnostic Indicators
Pre-rug warning signs observed in laboratory conditions:
- Anonymous team with no verifiable history
- Locked liquidity that’s actually… not locked
- Token contract with mint functions or hidden fee switches
- Marketing budget that exceeds development budget by 50:1
- The phrase “trust the process” used unironically
See also: degen (the rug pull’s preferred host organism), copium (post-rug coping mechanism).