Rug pull in NFT is one of several common scams by project founders. It’s a situation where the project’s founders entice potential collectors and bring them into the field. However, over time, the project’s developers fail to follow through on their claims after receiving funds.
In an NFT rug pull, the designers of the NFT have unexpectedly stopped supporting it. As a result, the floor price of the NFT plummets to zero, leaving the community with worthless digital arts.
One popular creator cashing out NFT rug pull is the Iconics scam. Iconics, an NFT project based on the Solana blockchain, promised investors 8,000 randomized 3D artworks. In the pre-sale, 2000 pieces were sold for 0.5 SOL each, worth over $140,000 then.
Community members received a random selection of emojis in their wallets instead of the artwork promised. The situation forced many to vent their concerns on social media.
Unfortunately, the Iconics’ Twitter account was shut down shortly after by the project’s alleged 17-year-old artist. He also disabled the Discord group’s chat feature, clearing his tracks till the present day.
Another occurrence of an NFT rug pull occurred with the Evolved Apes NFTs. Evolved Apes is a collection of 10,000 NFTs on the Open Sea. During the first dip, some NFTs were exchanged, and the developer promised a blockchain fighting game that never materialized.
The project was taken down by Evil Ape, its developer, a week after it was initially launched in October 2021. They collected 798 ETH after several transactions for project-related expenses and disappeared with it. Evil Ape also took down the project’s official website and Twitter account as part of the rug pull.
A recent NFT rug pull is the Frosties scam. Ethan Nguyen and Andre Llacuna were accused of stealing $1.1 million from the Frosties scam.
The hoax gained over a million dollars and was the first NFT rug pull of 2022. By selling 8888 NFTs to consumers for an average floor price of 0.04 Ether, the scammers profited a total of $1.3 million. Till today, there are still several rug pulls in NFT on the internet.
With a clear understanding of what rug pull means, your objective should be to stay away from it. Many rug pulls have unclear backgrounds and are always flashy and seductive projects.
They offer suspiciously numerous benefits for investors with little or no background information on the developers. Also, they don’t have a strong background and suddenly appear out of the blue.
You can avoid NFT rug pull if you diligently do your research. Ask questions on their discord about the project’s future and what utility they offer. Read through their whitepaper to spot any inconsistencies or errors. Also, check for the relationship between admins and moderators. Stay away from links and anonymous individuals lurking around the net and trade NFTs safely.« Back to Glossary Index