A scam where a token's creators drain the liquidity or dump their holdings after attracting buyers, leaving the token worthless.
Rug pulls are common in new tokens on dexes, where anyone can create a token and a liquidity pool. Warning signs include anonymous teams, unlocked liquidity, and a few wallets holding most of the supply.
It is the crypto-native form of a pump-and-dump, and it is why on-chain due diligence matters.
Example: a token launches, rallies 900% in two days on social media hype, then the deployer wallet removes $2 million of liquidity from the pool. The price goes to near zero within minutes.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
Educational only, not advice. Spotted an error? Post in Site Feedback.