Quarter Circle Rug: How to Protect Yourself from Rug Pulls in Crypto Projects

In case you’re researching the world of cryptocurrency, then you probably know about “rug pulls.” A form of scam where a developer pulls funds, so to speak, from investors. But surprisingly enough, the term “**quarter circle rug**” used in interior design can be the perfect parable to explain such scams with cryptocurrency. The following article uncovers what rug pulls are, why they happen, and how to avoid the scam.

Table of Contents

• What is a Rug Pull in Cryptocurrency?
• Quarter Circle Rug as a Metaphor for Cryptocurrency Fraud
• How to Protect Yourself from Rug Pulls (Quarter Circle Rugs) in Cryptocurrency
• Frequently Asked Questions

What is a Rug Pull in Cryptocurrency?

A rug pull is scamming by the developers of a cryptocurrency project when they drain all the funds from the liquidity pool and leave the investors with nothing. These projects tend to appear promising, offering high yields, but after accumulating enough money, the developers disappear, and the tokens are worthless.
The process tends to go in this way:

1.  Issuing a new token or DeFi project
2.  Advertising and enticing investors
3. Rug pull — devs receive all funds, and tokens are worthless.

Like an interior design quarter circle rug, maybe pleasant to observe but practical only to use to fill in a corner so something is complete, scammers establish “trust” and “interest” in a project and rug-pull investors.

Quarter Circle Rug as a Metaphor for Cryptocurrency Fraud

Similar to a quarter circle rug in home design, rug pulls are utilized by scammers to create the appearance of being trendy and complete for the room, with tokens gaining value overnight and gaining investors. Then the “corner” of the fake crypto scheme “comes into view,” breaks down into a complete image, and leaves individuals with worthless investments.
Here’s how it functions:

1.  Project Attractiveness — The project begins with low liquidity and becomes interesting through promotion and aggressive marketing with promises of fabulous returns on investment.
2. Interest Building — Similar to the strategically positioned quarter circle rug which makes a room breathtaking, the project begins to attract attention and become popular among crypto investors. Growing investment, raising the price of the token.
3.  Rug Pull — At last, when the funds are at their maximum, the developers abscond with the money, and the investors are left with worthless tokens.

How to Protect Yourself from Rug Pulls (Quarter Circle Rugs) in Cryptocurrency

Below are some measures that can be taken in order to save yourself from becoming a victim of a rug pull in cryptocurrency projects:

1.  Do Your Research — Just like selecting the appropriate rug for your house, you need to do your research properly before investing. The project where you wish to invest should be clear and transparent. Explore the team that is developing the project, follow them on social media, search for reviews and history of the project.
2.  Check Liquidity — A project with low liquidity is most likely to be a rug pull target. If the liquidity is too low or can be withdrawn easily, this should be a red flag. Never invest in tokens where there is not enough trading volume on exchanges.
3. Check Smart Contract Audits — Smart contracts involving tokens need to be audited. Otherwise, this is a significant red flag and high-risk possibility of scamming.
4. Monitor the Community — Active communities have a tendency to sniff out shady projects in advance. If a project starts getting negative feedback or complaints, questioning your investment is appropriate.
5. Suspect Aggressive Marketing — If a project is promising high returns or “guaranteed” profit—this has to always be a red flag. There are no quick and easy ways of making money in cryptocurrency.

Frequently Asked Questions