- Pepe Coin, Dogecoin, and Shiba Inu Coin are all memecoins which have gained the attention of mainstream people in recent years
- But, due to the wild excitement in users for this coin, rug pull scams have increased in significant numbers
Memes have always gained attention from netizens because of their fun nature. Now, as the emergence of cryptocurrencies increases, memecoins are also becoming famous. These memecoins are generally based on the viral memes that trend on the internet.
Some examples of these memecoins are Pepecoin, Dogecoin, Shiba Inu, and many more. While the hype surrounding these coins is expanding, there are also scams in the market. The unanticipated rise of the Pepecoin recently has led to a number of coins emerging in the market.
However, the rise has also created a market for scammers where they can easily scam early investors or investors who have less knowledge about the market. These scammers can often create a fake project, making it feel like a real one. But how do you stay safe in this era of memecoin hype.
Well, it’s simple, this guide will show you how to be on the safer side while investing in this tricky crypto landscape.
Rug Pull Scams- At a Glance
Rug pull scams are the most common scams in the crypto space. These scams generally happen when the project developers run away with the investors’ funds. With the crypto space widely expanding, more and more rug pull scams are happening. That’s why it’s better to play it safe.
How To Avoid Scams or Be Safe?
These scams can be avoided by seeing a few signs. These signs show that a project could be a potential rug pull scam, making you fool. Without any hesitation, let’s get started.
1. Social Dominance
You can check the social dominance of the project. You can check the official channels on YouTube, Twitter, or Instagram. Moreover, you can see that legit projects do not sponsor videos or anything from the sponsoring side. This is because they feel that the YouTubers do not know much about the crypto landscape.
Besides these, they officially do their marketing by creating a community. You can also check the followers of a particular project.
2. Liquidity Locked
Liquidity is another way to identify the project’s legitimacy. If you find that the total value locked or liquidity is up to around $100K, then you should mark the project as a red flag. The low liquidity signifies two things. First, the developers hadn’t invested much in the project. Another, it can easily manipulate things.
Locked liquidity is another concept by which you can identify the rug pull scam. It signifies how much the developers have invested in the project. As it becomes difficult for the owner to manipulate if it has locked in a huge investment.
3. Token Holders
You can check the accounts of the token holders of the project, especially the top holders, or ‘whales’. Blockchain explorers like Etherscan can assist with this. Avoid getting involved in the project if they have more than 15% to 20% ownership of it. This could be very expensive for you.
It basically suggests that whales control the entire planet. Additionally, they may simply sell the tokens to get rid of the cash, and in exchange, they will treat you well.
4. Whitepaper
Whitepapers, which are the foundation of the majority of cryptocurrency initiatives, are very detailed descriptions of the projects. In these publications, you may also discover the project’s purpose statement and road map. These whitepapers can help you check their legitimacy, as they are generally long.
If they are short, and the company’s missions are not clear to you, then it’s a red flag project. Most scammer projects contain a whitepaper that is very short and contains fussy and confusing words.
5. Renounced Contract
Renounced contracts basically mean that the developers are not interacting with the project any more. It is always advised to verify the renounced contract, as it will give investors a sense of security. It also makes them feel that there is no manipulation from the developer’s side in the project.
These are all the signs by which you can identify any scammer’s project. This can help you make a better judgment on the project.
