Types of Rug Pull Explained
Hello beautiful steemians hope your day is running smoothly. For me, i am doing great and fighting for a better tomorrow. In my last crypto post i made a tour with you with regards to what is rug pull and how you can completely stay away from it. Equality i did site the various types of rug pull you can encounter in the crypto market .You can know more about rug pull here.
In this post i will show you the various ways scammers carry out rug pull .
Pump and dump
This actually occurs when developers of a token who hold the highest supply of a particular token carry out mass social media publicity causing the price of that token to rise. This is call pumping . When this occurs they quickly sell their large chunks of tokens and pull of the market. Leaving retail investors at their own mercy . The price of the token drops drastically causing the token to become worthless .This is called dumping .
Sell order limit
You are already verse with the fact that for a token to be developed some coding is required . So scam developers are capable of coding a new token in such a way that you will be able to buy the token but you won't be able to execute a sell order . Only the developers would be able to sell the token. This action cause the price of the token to keep rising until the developers sell their holdings causing a drastic dip in the market. Even at that investors won't still be able to sell their tokens. This is the most painful type of rug pull you can fall into. Watch out.....
Liquidity stealing
This is the most common type of rug pull.
Before i explain this let me brief you on what we mean by liquidity .Liquidity simply means adding value to a particular coin. So for you to add value to coin you do so by investing some money in order to add liquidity in any Defi exchange. Thus the higher you inject the more valuable that token will become and the lesser you inject the lesser the value of the token.
In this type of rug pull since the creator of the token is the sold liquidity provider ,they may decide to remove the liquidity after they have realised huge sales. This renders the coin valueless and leave investors with worthless coins. This is very common with Bep20 tokens. So be warned . always investigate well before investing in a coin. Read my previous post by clicking on the link in the first paragraph to be able to avoid rug pull ..
If you can master all these strategies then you will stand a better chance of escaping being scammed .
Thanks for reading and stay tuned for more crypto tips.
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