CryptoMode Scam Alert DeFi Rug Pull

The DeFi industry has been plagued by a growing number of rug pulls. When token creators drop the price to $0 without recourse, a problematic scenario ensues. As it turns out, creating such a rug pull is not all that difficult. 

Five Lines of Rug Pull Code

For every DeFi project or token to be created, the smart contract is visible on the Ethereum blockchain. Anyone can effectively create their own token, but very few of those should ever have any value at all. To counter that problem, nefarious developers have come up with five lines of code to create a potential rug pull.

As can be seen in the Tweet below, the code itself is rather elegant. It may not look nefarious at first, but it serves a very specific purpose. Implementing this code ensures the token owner can only buy said asset, but never sell it. As such, anyone looking to create a rug pull on Uniswap – or other DEXes – could implement this code to create a very problematic project.

More specifically, this code seemingly applies to anyone but the creator. As such, it is possible to create a new token, list it on Uniswap, and begin trading. Users can only buy from the contract and never sell. By the time anyone notices, the damage will already be done. A rug pull is the likely outcome at that point. 

This is not the only type of DeFi scam one can engage in, but perhaps the easiest one to pull off. Unfortunately, spotting this code requires having some knowledge of the smart contract language in the first place. Most people can’t read Solidity, nor do they know what to look for exactly. 

The Wild West of DeFi Tokens

Regardless of what type of rug pull is being explored, the DeFi space remains controversial. So many fake projects have shown up in recent months. A lot of people lost good money in the process. Due to the trading on DEXes, there is no way of getting the money back either. 

Solving these problems can be done by having all contracts audited. That will not happen any time soon, however. Most DeF creators want to score a quick buck and then leave the project be. Conducting an audit is not in their best interest, even though it introduces much-needed legitimacy. 

LEAVE A REPLY

Please enter your comment!
Please enter your name here