Rug Pull

A rug pull is a type of exit scam in the cryptocurrency world where developers of a project suddenly withdraw all liquidity from a decentralized exchange (DEX) or abandon the project, leaving investors with worthless tokens. This often happens in DeFi projects, where the project creators build hype around a token, attract investors, and then disappear with the funds. Rug pulls are a significant risk in the decentralized finance space, particularly in unvetted projects or tokens listed on decentralized exchanges without proper scrutiny. Example: In 2021, the developers of a DeFi project called "Frost Finance" performed a rug pull, draining liquidity and leaving investors with worthless tokens.