The other day, I went through an unenviable but inevitable right of passage in the NFT space — my first instance getting rugged. The term “rugged” or “rug” comes from a “getting the rug pulled out from underneath you”, otherwise known as getting scammed. There are many scams in the NFT and crypto space, and despite the inherent transparency of the blockchain, the scammers themselves can remain easily anonymous.
What specifically happened on the project I was rugged on was that it was minting quite slow (only a few hundred out of the 10K minted after 24 hours). At which point, the owner was admitting in DMs that it was a rug pull, and shortly thereafter the Twitter, Discord, and website were all deleted. Thankfully it wasn’t a more malicious scam where your wallet was cleaned out — the loss was just the mint cost of the pieces. I chalk this up as the cost of an important lesson.
In that instance, the motivation to rug was also unclear to me. People were still minting, so why not keep it going to maximize the take? And the total amount gained was in the thousands of USD, which pales in comparison to the amount raised by mints (both legitimate and illegitimate) that run to completion. The effort didn’t seem worth it, but I doubt we’ll ever get the full story.
In retrospect, the project I was rugged on had some red flags. I’ll enumerate them here, in the interest of contributing to the education of our community on avoiding rug pulls.
Of course, this brings all of the usual caveats — do your own research, and this is not financial advice!
Look at the engagement
The project I was rugged on had a decent following on Twitter (over 10K) and a decent amount of people in the Discord (a few thousand). I’ve seen many legitimate projects with smaller figures. Of course, all of these are numbers you can (cheaply) buy to bolster the appearance of legitimacy. What is more difficult to fake is the engagement, and in hindsight that project had fairly low engagement in both the Twitter and Discord. It wasn’t so low that it was more suspicious, but it was definitely not in line with the amount of “followers”.
Look at the team
In my case, the “team” appeared just to be a single person. While it’s not impossible for a single person to roll out a legitimate project, it’s a lot of work, so it’s much less likely that they will follow through with things. There was also no past projects (that were listed, at least) of the owner, or their Twitter, or anything about them as a person or their background. It also turned out that the mods were just users that were early in the Discord, and had no affiliation to the team. This isn’t an unusual way of recruiting moderators, but also meant that there was no connection to the actual owner(s) of the project (meaning they could vanish more easily).
Look at the roadmap
The roadmap for that project was exciting, but a bit unrealistic in hindsight. There was a promise of a playable online game to be rolled out within a few days of the mint, where you can use your token as a character in said game. This is not something that is impossible, as other NFT collections are taking a similar gamification approach, but it’s very unrealistic that a single-person team would be able to undertake the technical lift of creating this game (even if having outsourced the work) in such a short timeline.
Look at the process
In the case mentioned here, the mint’s timing was all over the place, with at least the following changes:
- Original mint date in mid-October 2021, mint price was set as 1 SOL.
- Mint moved up to early October, mint price reduced to 0.3 SOL (not super unusual, however).
- On mint day, mint time was moved 3–4 times due to “technical issues” (again, not impossible, but started to get unusual).
- On rug day (mint day + 1 day), they changed (briefly, before the site went down) to mint 3 tokens for the same price. This is also something legitimate mints have done before to improve volume, but there was no mention of airdrops for existing owners.
The owner was also not really responsive to questions / technical issues. While understandable that they can be busy (especially during time of mint), the “customer service” aspect in the community is key (and free). Overall, the process gave an air that they didn’t have things together.
Other minor flags
When the mint time came, there were some other issues:
- Prior to mint, the mint button was active (usually a mint site would have a countdown), although it didn’t let the mint transaction actually complete.
- Despite it being a 10K mint, for a while it showed the amount remaining out of 5K (and the 10K figure was right on the same page!).
- The numbering of the tokens was weird — usually they are sequential but in this case they went from 100s to 1000s in numbering right away (e.g., 106 to 1060).
- The amount minted as announced on Twitter was not aligned with the number remaining on the mint page (Twitter said 350 or so were minted, the mint page said about 150).
Metadata was also very inconsistently coming up and taking quite a while, although I have also seen that in legitimate mints — it just takes some time.
What’s difficult is that a lot of the red flags can happen to legitimate mints as well. It’s just part of being in such a nascent space that moves so quickly. So the above isn’t meant to say that the red flags are a hard blocker, but they are pieces to keep in mind from looking at an actual rug pull in hindsight.
It’s easy to get excited about new mints, and in this space even legitimate mints might have “cheaper” graphics and low quality websites, so it’s more difficult to sort out the decent bets from the red flags. As stated above, this is not financial advice, and do your own research! I hope the outline here can provide a good start for doing said research.
Feel free to reach out or comment with any questions, and follow me on Twitter and/or Medium if you enjoyed this content!