Rug Pull
By CoinGecko | Updated on Aug 12, 2021
In the English lexicon, to pull the rug out (from under someone) means to to suddenly take away important support (from someone). In the context of crypto and Decentralized Finance (DeFi), having been rug pulled means to have liquidity removed from a Decentralized Exchange (DEX) liquidity pool. This results in a sell death spiral as other liquidity provider, holder and traders panic at the loss of available liquidity for trading. Once liquidity has been drained, token holders are usually left with illiquid assets which may not be tradeable anywhere else. It is worth noting that many projects have taken measures to alleviate rug pulling risks by committing certain level of liquidity in a way that can't be removed (ie, LP Token Burn, Liquidity Locking contract..etc). However, it does not fully eliminate rug pulling risks and market participants should conduct due diligence prior to trading.
Related Terms
IEO
Initial Exchange Offering (IEO) is a spin-off of Initial Coin Offering (ICO), where the sale of tokens are conducted on an exchange rather than by the coin team themselves.
Golden Cross
It is a bullish signal in technical candlestick pattern by comparing two lines of short-term moving average and long-term average. It is a golden cross when the short term moving average broke its long-term moving average.
Mining Pool
Combination of resources of several miners to obtain a higher mining power and thus achieve greater rewards for the opening of blocks.
Transactions Per Second (TPS)
It is number of transactions done per second. For example, there are 10 transactions of Bitcoin done in 1-minute. The TPS would be 10 transactions/60 seconds = ~0.17 TPS.
Hungry for more knowledge?
Back to Glossary or Subscribe to our newsletter.