Rug Pull
A scam where project founders abruptly withdraw liquidity or abandon a project, leaving investors with worthless tokens.
A rug pull occurs when the creators of a crypto project — typically a new DeFi protocol or NFT collection — drain the liquidity pool or project treasury and disappear with the funds. The term evokes the image of pulling a rug out from under investors.
Rug pulls range from soft rugs (developers quietly abandoning a project and dumping their tokens) to hard rugs (a built-in smart contract backdoor that lets the team drain all liquidity in a single transaction). The latter requires no deception beyond the initial launch.
Red flags include anonymous teams, no audited smart contracts, unrealistically high APYs, short vesting periods for team tokens, and copycat contract code. DeFi security firms like Certik and Trail of Bits provide audits that reduce (but don't eliminate) exploit risk.