What is Rug Pull?
A crypto scam where token creators abandon a project and drain the liquidity pool, leaving holders with worthless tokens.
A rug pull is a type of cryptocurrency scam where the creators of a token suddenly remove all liquidity from the trading pool and disappear with the funds. Token holders are left with tokens they can't sell because there's no liquidity left.
How Rug Pulls Work
- •Scammer creates a new token
- •They add liquidity to a DEX (paired with SOL or USDC)
- •They hype the token on social media to attract buyers
- •As the price rises and more people buy in, the pool grows
- •The scammer removes all liquidity — the pool is "pulled"
- •Token price crashes to zero, buyers can't sell
Types of Rug Pulls
Hard Rug
Creator removes all liquidity instantly. Token becomes untradeable. Most obvious and damaging.
Soft Rug
Creator slowly sells their token holdings over time while maintaining appearances. Harder to detect but still results in significant losses for holders.
Honeypot
Token is designed so that only the creator can sell. Buyers can purchase but the smart contract prevents them from selling.
Protecting Against Rug Pulls
When copy trading with SOL Wallet Shadow:
- •Stop losses limit damage — If a rug pull happens, your stop loss triggers before you lose everything
- •Follow verified whales — Smart money wallets are less likely to buy into obvious scams
- •Small position sizes — Don't put too much capital into any single token
- •Check token fundamentals — Even when copy trading, a quick check of the token's liquidity, holders, and contract can help avoid scams
Warning Signs
- •Very new token with no track record
- •Anonymous team with no verifiable identity
- •Locked liquidity claims that can't be verified
- •Unrealistic promises of guaranteed returns
- •Pressure to buy quickly before "it's too late"