Wild West
You will lose money buying NFTs. Recently, thousands of wallets were drained for more than 5 million, and their wallets were not connected to anything fishy.
Today was the first time I have personally been rugged. I lost 200+ USD on the project. The term rug means that the founders are running with your money. They lie about their vision and delete their social media accounts.
Magic Eden has launched a lot of rugs, however, the community gave them serious backlash, and now they Dox (gather personal identification on founders) projects.
A lot of projects that rug usually launches on LMNFT! Additionally there are a lot of crypto currencies that rug. There are handfull of websites on every blockchain that support launching crypto currency (memecoins) with a couple clicks of a button. It is easy to use a service to make a NFT collection (10k art pieces) and launch a memecoin, it can be done within an a day.
Common ways of getting your money stolen:
- Degen Mints (#1): Projects with little to no information about their vision or their founders. Usually, all degen mints go to $0! They usually are not Doxed.
- Free “NFTs”s sent to your wallet: You will be airdropped “NFTs” randomly that are scams. They state that you need to go to this website to collect your prize. When you’re new to trading, they can sometimes confuse you because they look like whitelisted (wl) tokens from a project that you need. However, if you see a link. Do not click it.
- Over-the-counter trading (OTC): A person offers to buy your NFT on a third-party website such as Famous Fox Federation or WWW. However, the link is fake, and clicking it will drain your wallet.
- Bad mint links: Usually people “shill” (share) links in discord of degen mints. Clicking on a bad one will drain your wallet.
- Hot wallets: Your phantom wallet is always connected to the internet; your funds can be stolen without doing anything.
- Soft Rugs: Projects that give up or had the intention of never delivering. Usually, the team starts becoming less active with the community. Sometimes, they just mismanage their money and cannot continue.
- Hard Rug: Ow
The project that rugged me launched on LMFT and was listed on Magic Eden for hours and had decent trading volume!
Final Thoughts
The crypto space is filled with rugs. Everyday there are thousands of new crypto currency (memecoins) launched and there is always a NFT project minting. And 99% of them RUG.
Only 1% of memecoins and NFT projects survive. Those that do also struggle staying relevant and struggle maintaining momentum. Usually when a project or token launches, it reaches ATH (all time high) price then stabilizes.
Users on Pump.fun can literally watch in real time memecoin projects rugging and going straight to 0. Mostly all developers of memecoins hold a large bag upon creating a coin and when they think it’s a great time to sell, they will crash the coin by selling their entire position.
