How to Avoid Rug Pulls and Invest Wisely in Crypto and Meme Coins

I want to share my own experience getting scammed with a meme coin.

First, I saw a lot of hype on Twitter/X and Telegram. I did some research, this one seemed like the next big thing; every influencer was endorsing it, the amount of followers was high enough, but not to much so I would not get a good chance of getting early. There was not website, just social media.

The team was anonymous, but I ignored that, swayed by the hype. Despite this, the promises of quick profits blinded me. I invested in the presale, where I had to send some crypto (SOL) to their wallet, expecting to get their token in return. After they had raised more than $300k, they added some liquidity to a decentralized exchange.

The price surged, affirming my belief. Then, suddenly, the team withdrew all funds, crashing the price to nothing.

In hindsight, the red flags were there: anonymous creators, aggressive marketing, and unrealistic promises. This painful lesson taught me the importance of thorough research and skepticism in the volatile crypto world.

How to avoid getting scammed

The term ‘rug pull’ is an infamous scam in the cryptocurrency world where developers create a token, hype it up, then withdraw all the funds, leaving investors with worthless assets. This article educates readers on identifying and avoiding such scams.

Understanding Rug Pulls:

1. Creation & Hype: Scammers launch a new token, often promoted aggressively online; lot of followers on social media, influencers endorsing the token, really bad website or nothing at all.
2. Initial Investment: They may invest their own funds to create a false sense of security and legitimacy. They may even have tokenomics and a roadmap.
3. Price Manipulation: Through marketing and limited initial supply, the price is artificially inflated. You have the opportunity to invest in the presale, and also through any DEX where they add liquidity.
4. The Pull: Once enough investment is in, the scammers withdraw everything, crashing the price.

Red Flags:

1. Anonymous Teams: Be wary of projects where the team’s identities are unknown.
2. Unusual or No Tokenomics: Watch for large portions of tokens held by a few wallets.
3. Lack of Audit: Legitimate projects often have their smart contracts audited.
4. Excessive Hype: Be cautious if the project relies heavily on marketing rather than substance, this is key.
5. Quick Profits Promise: High returns promised in a short time are a classic sign of scams.

Conducting Research:

1. Community Feedback: Look for genuine community discussions and feedback.
2. Track Record: Investigate the team’s past projects and reputation.
3. Smart Contract Audit: Check if the contract has been audited by a reputable firm.

Conclusion

Never invest in a meme coin, maybe just for fun, but never take it as a serious project. Also, understand that there is a high probability of getting scammed.

There are a lot of great projects that can have a 1000x return without the hype and with a long term strategy, which is the only way of building something that has value.