Developers who abandon a cryptocurrency project and run away from cash are common in the world of DeFi (decentralized finance).
“rug pull” and “soft rug”scams
Decentralized finance was already a victim of”rug pullovers“whose principle is relatively simple. A developer bases his cryptocurrency project. He promotes it through social networks and influencers in order to attract users.
Once the sweater is high enough, the developer withdraws from the project, taking with him the liquidity and funds. Project Meerkat Finance from the BSC is an example of “rug sweater”.
The “soft rug“is slightly different. Indeed, at its core, the idea is not necessarily to create a scam, but often results from a threatened project. The developer then suddenly abandons the project by diverting all or part of the community funds intended for the development of the project. As a result, it does not steal from users ‘ investments, but users still end up with a project that can no longer really develop due to lack of funds.
The “soft rugs” have appeared more recently, and among the most egregious examples we can mention the case of Polywhale Finance. The founders of this project were accused of selling their tokens during the latest price collapse of the cryptocurrency market.
A distrust that settles in the world of cryptocurrencies
Faced with more and more cases of supposed “soft rugs” and while the market is in sharp decline, the distrust settled among investors.
The world of cryptocurrencies has not yet found a way to fight these scuttles. These threats are in addition to those of hackers who take advantage of security breaches to recover some of the project funds.
Unfortunately, this mistrust can lock itself into a vicious circle in which everyone seeks to save their investment by leaving the ship on time.
Moreover, this lack of trust does not promote the stability of cryptocurrencies. On the contrary, this mechanism rather encourages the high volatility cryptocurrencies.
Less easily discernible than “rug sweaters “”softs rugs” present themselves as a more sneaky threat to the cryptocurrency market. And the current decline in prices does not promote a renewed confidence for investors. As a result, accusations of “soft rug” are becoming more frequent.
My interest in new technologies has teleported me into the blockchain universe. Dimension both complex and so vast that my brain first reacted in “Error 404 ” mode bordering the spatio-temporal flaw before I gradually understand the codes.
The road is still long before getting the salvation of the Crypto god, but in the meantime I take the opportunity to share my passion with you.
DISCLAIMER
The words and opinions expressed in this article are the sole responsibility of the author and should not be considered as investment advice. Conduct your own research before making any investment decisions.
