Rug Pull
A type of crypto scam where project developers abruptly abandon the project and steal investor funds after attracting significant investment. Common methods include draining liquidity pools, exploiting hidden backdoors in smart contracts, selling a large pre-mined token allocation, or minting unlimited new tokens. Rug pulls are most common with new, unaudited tokens.
“The Squid Game token was a notorious rug pull — developers coded the contract to prevent selling while the price surged to $2,800, then drained all liquidity and disappeared with $3.3 million.”
Crypto Scam
Fraudulent schemes in the cryptocurrency space designed to steal users' funds or private keys. Common types include rug pulls (developers abandoning projects), phishing attacks (fake websites mimicking legitimate services), Ponzi schemes (paying existing investors with new investor money), pump-and-dump schemes, fake airdrops, and social engineering attacks impersonating trusted figures.
Liquidity Pool
A collection of funds locked in a smart contract that enables decentralized trading on AMM-based exchanges. Liquidity providers (LPs) deposit paired tokens in equal value ratios and earn a share of the trading fees generated by swaps in that pool. Pools replace traditional order books in DEX architecture.
DYOR (Do Your Own Research)
The practice of thoroughly investigating a cryptocurrency project before investing, including analyzing its team, technology, tokenomics, competitive landscape, community, and potential risks. DYOR is both a personal responsibility mantra in crypto and a disclaimer often used by influencers to absolve themselves of liability for their recommendations.
Smart Contract Audit
A comprehensive security review of a smart contract's source code performed by specialized firms to identify vulnerabilities, bugs, logical errors, and potential attack vectors before or after deployment. Audits examine code quality, access controls, economic assumptions, and edge cases. While audits significantly reduce risk, they are not a guarantee of safety — exploits have occurred even in audited contracts.