Written by Pablo Gómez
Founder & CEO at Metlabs · Reviewed on October 11, 2026
There are two variants. A hard rug pull is coded into the smart contract: malicious functions that withdraw all liquidity from a pool, unlimited minting functions that dilute investors, or a honeypot, where the sell function reverts for everyone except the creator, so the token can only be bought. A soft rug pull is behavioral, with no code involved: insiders sell their holdings gradually, stop development and disappear from the community.
Why it matters for due diligence. The rug pull is the central risk when assessing low-capitalization assets. The warning signs are verifiable on-chain before investing: liquidity not locked with a timelock, supply concentrated in a few wallets, an unverified and unaudited contract, dangerous owner functions (mint, pause, blacklist) and no renouncement of contract ownership. Globally, regulated venues and audited issuers reduce exposure, since the fraud relies on anonymity and on contracts that no third party has reviewed.
Also known as
- rugpull
