How to Spot and Avoid Rug Pulls

1. What Are Rug Pulls?
   • Definition: A scam where developers abandon a project and run away with investors’ funds.
   • How It Works:
     • Developers create a low-cap coin and hype it up.
     • Once enough investors buy in, they sell off their holdings and disappear.
2. How to Spot Rug Pulls:
   • Tokenomics: Check for fair distribution and burn mechanisms.
     • Tools: Use Solscan and Birdeye to analyze tokenomics.
   • Team: Research the team’s background and credibility.
     • Tools: Use LinkedIn and GitHub to verify the team’s credentials.
   • Community: Join the project’s Telegram/Discord to gauge engagement.
     • Tips: Look for active and engaged communities with transparent admins.
   • Red Flags:
     • Anonymous Teams: Avoid coins with anonymous developers.
     • No Clear Use Case: Avoid coins with no utility or roadmap.
     • Pushy Admins: Be wary of admins who avoid tough questions or push for quick investments.
3. How to Avoid Rug Pulls:
   • Use RugDoc: Check the project’s audit and risk rating.
     • Website: RugDoc
     • Filters: Only invest in projects with a “Low Risk” rating.
   • Check Liquidity: Avoid coins with low liquidity (< $50k).
     • Tools: Use DexScreener and Birdeye to check liquidity.
   • Track Whale Activity: Use Solscan or Birdeye to monitor large transactions.
     • Filters: Look for new wallets with large buys (> 1 SOL) and avoid coins with sell pressure from top holders.

Using RugDoc and TokenSniffer to Evaluate Projects

1. RugDoc:
   • What It Does: Reviews and rates DeFi projects to identify potential scams.
   • How to Use:
     1. Go to RugDoc.
     2. Search for the meme coin.
     3. Check the audit and risk rating.
   • Insider Tips:
     • Avoid High-Risk Projects: Only invest in projects with a “Low Risk” rating.
     • Check Audits: Ensure the project has been audited by a reputable firm.
2. TokenSniffer:
   • What It Does: Analyzes token contracts to identify potential scams.
   • How to Use:
     1. Go to TokenSniffer.
     2. Enter the token’s contract address.
     3. Check the risk score and contract details.
   • Insider Tips:
     • Avoid Suspicious Contracts: Look for contracts with hidden functions or high-risk scores.
     • Check Ownership: Ensure the contract is renounced (no owner can modify it).