A rug pull is a type of scam in the cryptocurrency space where a developer or creator promotes a project, such as a new coin or NFT release, and then disappears with investor money, leaving buyers with a worthless asset. The name comes from the idiom “to pull the rug out” from under someone, leaving the victim off-balance and scrambling. Rug pulls have increased as decentralized finance (DeFi) attracts more investors to the crypto space. There are two types of rug pulls: hard and soft. A hard rug pull is when a developer has no intention of ever completing a project and intends to scam investors from the start, such as “hardwiring” a project’s code to leave an avenue open for theft. In contrast, a soft rug pull typically doesn’t have code-level fraud. Instead, soft pulls tend to rely on marketing hype to falsely inflate a project’s value, and then the project’s founders shut it down and run away with the money. Signs of a rug pull include a token price that rockets in a short amount of time without any protection on liquidity, and the project owners being able to remove their funds immediately or very shortly after the project’s launch. To protect oneself from rug pulls, it is important to do diligent research on projects, including looking at the state of the product, its tokenomics, token distribution method, liquidity, and team.