PRVarmies! After we discovered what to consider when buying a new token, we will now discuss one of the latest scams wandering in the DeFi space, the soft rug.
Crypto investors have been baffled by so many happenings with crypto. Early investors had witnessed how crypto had risen and fallen since its birth. However, the story goes on and struggles continuously arise. Now, they are facing a new problem, the danger of soft rugs. What is a soft rug, and why should you keep your eye on it?
One of our previous articles covered rug pull and briefly discussed how bad rug pull could affect investors and spot a possible one. However, rug pull is not limited to that. Like the virus, this scam has a new variant. What is a soft rug, and is it different from rug pull?
Soft Rug- a new threat to crypto investors.
Rug pull had been threatening crypto investors ever since its existence. To give you an idea, rug pull is when the developers pulled away all the tokens staked in the platform before altogether abandoning the platform. As a result, investors can no longer buy and sell tokens, deeming them worthless.
In a broader aspect, When a large number of naïve investors exchange their Coins (e.g., BNB, ETH, and BTC) for the listed token, the developers withdraw everything from the liquidity pool, causing the coin’s price to fall to zero. Moreover, to maintain and build up investors’ trust, developers elevate the scam by creating a short buzz across Telegram, Twitter, and other social media sites and initially infuse a significant amount of liquidity into their pool.
Rug pulls thrive on DEXs because, unlike centralized cryptocurrency exchanges, these types of businesses allow individuals to offer tokens for free and without audit. Furthermore, token creation on open-source blockchain protocols such as Ethereum is simple and free. Malicious actors make use of these two factors.
On the other hand, a soft rug is when developers simply dump their tokens and depart the venture rather than seizing ownership of users’ assets.
One yield farming platform was recently accused of pulling a soft rug, Cointelegraph reported. The platform developer was said to sell all the tokens on the platform on the current market price dip. Though the platform developers noted that the sudden pull was because of the poor market statistics and bigger competition, the platform community thinks otherwise.
The soft rug is one of the most dangerous scams in the crypto-verse as it does not require any serious hacking. Therefore, it can be quickly executed by the developers.
Furthermore, you should keep an eye on any malicious event that happened on the platform, and the “too good to be true” offer by a platform developer could lead to a possible soft rug pull.
Long story short, soft rug and rug pull are no different. Both of them are scams, and everyone should keep an eye on them. It is good to rely on the platform, especially if you believe it could give you a significant return on your investment. However, don’t get swayed easily, as looks can be deceiving.
We at PrivacySwap prioritize your security and privacy. That is why we always advise learning the platform thoroughly to fully understand by heart how beneficial or dangerous a platform could be. We make sure that no one will experience rug pulls, and everyone will just enjoy investing in our platform. Henceforth, we align our ideals and aspirations with what Olawale Daniel said― “With DeFi, we are building the finance system of tomorrow that is more efficient, faster, more rewarding, and levels the playing field for everyone.”
Moreover, we aim to continuously give you the best platform without putting your assets at risk — we aim to deliver the best DeFi platform in the whole DeFi ecosystem. As part of that, our long-awaited PrivacyCard will now come to life, and more things will soon be unveiled.
Start your incredible journey at PrivacySwap now.