RUGS; LOSSES OR LESSONS?
“Rugs are like tithes, you just have to pay them”
This was the tweet I came across not long ago. I understood this but in my case, I have definitely been paying more than 10% and frequently at that. After striving for two weeks to get whitelist for a project that ended up not minting because it was flagged a rug, and using the only profit I had ever made to mint an actual rug, I was almost convinced NFTs were not for me. In the event of losing money and almost losing my mind, I could not help but notice that my friends were making money and being part of a vibrant and successful NFT community. I kept wondering where I got it all wrong. This was the foundation of my research.
Rugs in NFTs refers to a situation where NFT project owners abscond after mint (collecting money from investors) without carrying out any of the mapped plans or promises. The lucrative nature of NFTs attracted various people into the space, including cashgrabbers, whose sole purpose is to deceive the community to trust them with funds before vanishing into thin air. Tracing of the perpetrators of the act becomes almost an impossible task, while the address of the diverted funds may be traced, due to the use of blockchain technology, the owner of the address remains unknown.
After finding out what rugs meant and the various tactics used by NFT creators to ensure these rugs, my next point of research was to find the similarities between rugged projects. These similarities included, inexperienced web 3 developers, anonymosity and lack of information of project owners, vague roadmap, botted twitter followers, bots in discord community, project owners trying to evade questions asked about projects, excessive engagement farming, low real engagement on tweets.
Taking a close look at these similarities, they seem like things that should have been obvious and not difficult to miss, I was probably blinded by my chase for the “bag” and never stopped to consider properly scrutinizing whatever I choose to invest in. Perhaps all I needed was a rug so I could do more research because afterwards, the red flags and shadiness of any NFT project stood out so well. Investigating and surfing through the internet for information almost became natural instinct when I found out about project, unlike before where I immediately rushed to the discord server to start trying for whitelists before it gets tougher. My predictions were mostly right, except from the difference it made in my portfolio, my knowledge on NFTs had become more broad.
That tweet might have been right becomes almost everyone in NFTs have all gotten rugged at some point or the other, not to mention the increase in rug projects making it harder to identify. However, the effect of the rug shall be determined by you, like in my case, I gained more than I lost when I got rugged. You may not be able to control getting rugged but what happens after the rug is totally on you. Is getting rugged just going to end as a decrease in your portfolio?
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