Avoiding Rugpulls

Rug pulls happen generally when a project loses steam. The project may simply lack the support to generate enough income to build long term beyond the initial mint. It may not be their intention, but they may have begun something they can’t finish.

Choosing good projects is sometimes quite hard. Before you support any project you should background check them.

Background Basics

  • How much online presence does the project have? Website is a minimum
  • Is there a solid business presence? registered company, legal terms, etc.
  • Are the founders sharing their identity?
  • Is the leadership known within the CNFT community?
  • Is there an active discord with real conversation?
  • Is the project being over-hyped?
  • Are paid promoters doing the shilling?

If there are red flags within the basics, then a short-term rug is entirely possible.

Realistic Deliverables

  • Is the roadmap realistic?
  • How big is the team?
  • Are they full-time or operating a side hustle?
  • How are the team being funded for their efforts?
  • Are the timescales being under-estimated?
  • What happens when the hype dies down?
  • Has the utility been reviewed by a legal team?

If the project over-promises and the hype train runs out of steam… It could be a “We tried so hard and gave it everything we possibly could, but in the end we failed… Thanks for the memories! And the ADA!!” kind of rug.

Key Take Aways

Be careful out there, assume that 90% of projects are going to fail to deliver.

Now that we are into a second cycle, you should 100% consider aping into proven projects over unproven/unknown projects with a lot of hype.