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I think "rug pulls" is not defined well. One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leavin

I think "rug pulls" is not defined well. One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam, although I understand the community expectation being undermined. First: the SEC exacerbates this reality. Tokens that don't want to be considered a security have to consider NOT providing an expectation of liquidity. The team has to avoid expectations of providing secondary market liquidity just to stay out of the crosshairs of the SEC. And even in SEC registered land, If you look at the "risk factors" section of public equities, they frequently say "there may be no market for these securities, a secondary market may never form, there is no guarantee that it will always be there", which is true in all markets! Second: with the advent of AMMs, ANYONE can provide assets into the liquidity pool. (even the acronym of AMM don't tell you much about what this is, its just a different model of exchange that is very popular). So even if token traders had been relying on the team under an unspoken symbiosis of the team providing liquidity, the token traders now can do it themselves. This is also very common. The token traders typically follow incentives to actually do it, but they CAN without those incentives. Third: Token traders are the community and can take over any project to try to make their investment more profitable, it just requires more risk. It happens, but the times it doesn't happen the token traders just stop engaging with the project as well. How can this be distinguished from other "rug pulls"? I don't think it is possible.

PragmaticPulp 5y ago
> One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam If the team went through all of these steps with the intention of pumping the value of the coin, hyping others into buying it, and then extracting as much money from them as possible with no intentions of helping the coin succeed long-term, that seems like a scam to me. The victim-blaming mentality runs deep in the cryptocurrency world. It's fascinating how many people in the cryptocurrency space are reluctant to call a spade a spade only because the underlying blockchain or algorithmic rules weren't violated.
- vmception 5y ago
  And you think thats what I just did here? Describing why the categorization is wrong to you is a symptom of victim blaming? My point stands that the community can do what the team did but fail to take further risk or organize. They disperse just like the issuer did, when in fact they do all have agency and can fill the vacuum. unless the token was backdoored, then we can call it a scam.
  - mraudiobook_com 5y ago
    How do you reply to a comment so fast. Is there a way to get notified if your comment gets replied to?
  - pjc50 5y ago
    If the original team made promises with no intention of fulfilling them, and didn't, it's a scam. If on the other hand the community could do the same thing .. why did they need to pay the organizers (and their premine) in the first place?
    - vmception 5y ago
      team allocations aren't always the case. if chainanalysis is looking at the rug pulls that I'm talking about, then much of the time there was no upfront capital to the team with a separate premined allocation. many issuers are currently putting all the tokens created directly into a liquidity pool paired against capital they already had, bots and individuals buy into the liquidity pool and receive the new token, pushing up the price in the process, and then the issuer unbundles the liquidity pool, leaving no pool, (while acquiring the liquid capital added to the pool by purchases. AMMs function by then having less of the issuer's tokens and more of the tokens that were used to purchase the issuer's token) these are colloquially called rug pulls, because the liquidity pool was the rug. these happen so fast these days. These things can play out completely within 20 minutes, as bots and individuals are scanning the blockchain mempool for erc20 token creation transactions and liquidity pool creation transactions, just to get into a potential big project before anyone else. here, the traders are at no disadvantage to the issuer, from a community perspective, to continue the project and attempt making their investment valuable, specifically by adding to a liquidity pool themselves. again, my main point is that things that are very common are not being distinguished from whatever you or others want to argue about. its an article about this year, not 2017, not 2018, or some other year dominated by an antiquated style of ICOs. there is something to debate, but the vocabulary itself doesn't allow it, perpetuated by an organization that gets no benefit from distinguishing as all they want is technology contracts from governments.
Animats 5y ago
(OK, who went and made Hacker News text uncopyable?) I think "rug pulls" is not defined well. It's a standard type of investment scam, "take the money and run". The SEC even has a video for the clueless.[1] And a web site on ICOs.[2] This scam long predates cryptocurrency, or the Internet. Newspapers made mass-marketing a scam possible. That started about two centuries ago. Most scam types, like this one, are old. They just keep coming around in shiny new wrapping paper. This isn't innovation. [1] https://www.youtube.com/watch?v=FSBMSSnZ4Ro https://www.youtube.com/watch?v=FSBMSSnZ4Ro [2] https://www.howeycoins.com/index.html https://www.howeycoins.com/index.html
- DennisP 5y ago
  I just copied text out of your comment and pasted it here: > It's a standard type of investment scam
- vmception 5y ago
  The "innovation" here would be the ease in which communities can take over projects if they coordinate. But upon a second reading, I don't think you get my point that there are categories of things called "rug pulls" and the chainanalysis article does not distinguish well. I also think distinguishing is not possible to reach consensus, right now, but attempts should be made.
kristintynski 5y ago
Dogebonk is a good example of a community taking over a token, renouncing contract, locking liq etc. fascinating to see a true community meme engine revving up.
- vmception 5y ago
  Great, yeah, a lot of people aren't inspired enough to consider doing that, and others don't know it happens. The more examples the better. People really aren't as helpless in the crypto space as they act, or prompt onlookers to think.

PragmaticPulp 5y ago

> One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam If the team went through all of these steps with the intention of pumping the value of the coin, hyping others into buying it, and then extracting as much money from them as possible with no intentions of helping the coin succeed long-term, that seems like a scam to me. The victim-blaming mentality runs deep in the cryptocurrency world. It's fascinating how many people in the cryptocurrency space are reluctant to call a spade a spade only because the underlying blockchain or algorithmic rules weren't violated.

vmception 5y ago
And you think thats what I just did here? Describing why the categorization is wrong to you is a symptom of victim blaming? My point stands that the community can do what the team did but fail to take further risk or organize. They disperse just like the issuer did, when in fact they do all have agency and can fill the vacuum. unless the token was backdoored, then we can call it a scam.
- mraudiobook_com 5y ago
  How do you reply to a comment so fast. Is there a way to get notified if your comment gets replied to?
- pjc50 5y ago
  If the original team made promises with no intention of fulfilling them, and didn't, it's a scam. If on the other hand the community could do the same thing .. why did they need to pay the organizers (and their premine) in the first place?
  - vmception 5y ago
    team allocations aren't always the case. if chainanalysis is looking at the rug pulls that I'm talking about, then much of the time there was no upfront capital to the team with a separate premined allocation. many issuers are currently putting all the tokens created directly into a liquidity pool paired against capital they already had, bots and individuals buy into the liquidity pool and receive the new token, pushing up the price in the process, and then the issuer unbundles the liquidity pool, leaving no pool, (while acquiring the liquid capital added to the pool by purchases. AMMs function by then having less of the issuer's tokens and more of the tokens that were used to purchase the issuer's token) these are colloquially called rug pulls, because the liquidity pool was the rug. these happen so fast these days. These things can play out completely within 20 minutes, as bots and individuals are scanning the blockchain mempool for erc20 token creation transactions and liquidity pool creation transactions, just to get into a potential big project before anyone else. here, the traders are at no disadvantage to the issuer, from a community perspective, to continue the project and attempt making their investment valuable, specifically by adding to a liquidity pool themselves. again, my main point is that things that are very common are not being distinguished from whatever you or others want to argue about. its an article about this year, not 2017, not 2018, or some other year dominated by an antiquated style of ICOs. there is something to debate, but the vocabulary itself doesn't allow it, perpetuated by an organization that gets no benefit from distinguishing as all they want is technology contracts from governments.

Animats 5y ago

(OK, who went and made Hacker News text uncopyable?) I think "rug pulls" is not defined well. It's a standard type of investment scam, "take the money and run". The SEC even has a video for the clueless.[1] And a web site on ICOs.[2] This scam long predates cryptocurrency, or the Internet. Newspapers made mass-marketing a scam possible. That started about two centuries ago. Most scam types, like this one, are old. They just keep coming around in shiny new wrapping paper. This isn't innovation. [1] https://www.youtube.com/watch?v=FSBMSSnZ4Ro https://www.youtube.com/watch?v=FSBMSSnZ4Ro [2] https://www.howeycoins.com/index.html https://www.howeycoins.com/index.html

DennisP 5y ago
I just copied text out of your comment and pasted it here: > It's a standard type of investment scam
vmception 5y ago
The "innovation" here would be the ease in which communities can take over projects if they coordinate. But upon a second reading, I don't think you get my point that there are categories of things called "rug pulls" and the chainanalysis article does not distinguish well. I also think distinguishing is not possible to reach consensus, right now, but attempts should be made.

kristintynski 5y ago

Dogebonk is a good example of a community taking over a token, renouncing contract, locking liq etc. fascinating to see a true community meme engine revving up.

vmception 5y ago
Great, yeah, a lot of people aren't inspired enough to consider doing that, and others don't know it happens. The more examples the better. People really aren't as helpless in the crypto space as they act, or prompt onlookers to think.