How to Avoid Rug Pulls

🚨 What is a Rug Pull?

A rug pull is when developers create a token, attract buyers, then drain liquidity or sell their holdings, leaving investors with worthless tokens. It's the most common scam in crypto.

🔴 Red Flags to Watch

• 1Unlocked liquidity: If LP tokens aren't locked or burned, devs can pull liquidity anytime
• 2Large dev/team wallets: If top holders own 20%+, one sell can crash the price
• 3No website or socials: Legitimate projects have at least Twitter and Telegram
• 4Anonymous team: No track record, no accountability
• 5Unrealistic promises: "Guaranteed 100x" is always a scam
• 6Copied contract: Exact copy of another project's code
• 7Disabled selling: Honeypot — you can buy but can't sell

✅ How to Verify Tokens

1. 1
   Check Liquidity Lock

   Use RugCheck or similar tools. Look for locked LP for at least 6-12 months.

2. 2
   Analyze Holder Distribution

   Top 10 holders shouldn't own more than 20-30% combined (excluding LP and dead wallets).

3. 3
   Test with Tiny Amount

   Buy and immediately sell a tiny amount. If selling fails, it's a honeypot.

4. 4
   Research the Team

   Check their Twitter history. Have they built successful projects before?

5. 5
   Check Contract Authority

   Mint authority should be revoked. Freeze authority should be revoked.

🛠️ Verification Tools

💡 Protection Strategies

• ✓Small position sizes: Never invest more than you can afford to lose completely
• ✓Take profits early: Sell initial investment at 2-3x, play with house money
• ✓Follow trusted traders: Use whale tracking to see what experienced wallets buy
• ✓Trust your gut: If something feels off, skip it. There's always another trade.