GM HEARTLAND |
My bull market’s back, and he’s cooler than ever. |
—El Prof, Muhammed & Chad |
MONEY MONEY MONEY
TOKEN | PRICE CHANGE | PRICE |
---|---|---|
Solana ($SOL) | +7.11% | $141.65 |
Helium ($HNT) | +6.90% | $3.66 |
Pyth ($PYTH) | -0.10% | $0.32 |
Solend ($SLND) | -0.41% | $0.48 |
(Price changes reflect past 7 days as of 6.28.24)
Rug Pulls: Reading the Red Flags
The cryptocurrency landscape has witnessed a meteoric rise of meme coins in 2024, with celebrities and social media influencers lining up to endorse them. These projects often promise astronomical returns, but beneath the massive hype and social media frenzy lies a dangerous reality: the rug pull.
A rug pull is a malicious scheme where developers create a cryptocurrency project, generate excitement through marketing and celebrity endorsements, and then abruptly abandon it, typically by liquidating their stakes suddenly, leaving investors holding worthless tokens and major losses. The decentralized nature of cryptocurrency makes it difficult to track down the perpetrators, adding another layer of risk for investors.
Recent rug pull examples include:
Davido Coin: In May 2024, Afrobeats superstar Davido partnered with a company called Royalty Africa to launch DavidoCoin. The project promised to revolutionize the African music industry, but the price plummeted within a week of its launch, and investors reported the website disappearing. Davido later claimed he was unaware of the project’s true nature, yet another reason to do your due diligence before endorsing any cryptocurrency.
ZZ Top Coin: This meme coin based on the ‘70s hard rock legends launched with heavy promotion on social media in April 2024. The developers created artificial trading volume to inflate the price initially. However, within a week, the volume dropped dramatically, and the developers vanished, taking millions in investor funds with them. In other words, rug pulls don’t even need actual endorsements to generate enough culture-based hype for a quick profit.
Influencer Hype: Sahil Arora, a social media personality with a history of promoting questionable cryptocurrency projects, has been linked to several suspected rug pulls in 2024. His involvement raises concerns about the growing influence of social media personalities in the crypto space and the need for stricter regulations to protect investors.
But you don’t have to wait to uncover a rug pull under after the rug has been pulled. If you’re pouring your hard-earned funds into crypto projects, it’s crucial that you look for tell-tale signs of a potential scam before you invest.
These red flags include:
MetaMoney (META): MetaMoney promised to be the “currency of the future” for the metaverse. However, after the price surged, the developers disabled the ability to sell META tokens and disappeared with investor funds, demonstrating how rug pullers can exploit trendy themes to lure in unsuspecting investors.
BAYCCoin: In June 2024, a token emerged claiming to be affiliated with the popular Bored Ape Yacht Club NFT collection, using similar branding and promising exclusive benefits for BAYC NFT holders. But BAYC officially distanced itself from the project, and BAYC Coin’s price quickly crashed to zero, highlighting the dangers of copycat projects designed to capitalize on the reputation of established brands.
DeFi Sports Coin (DSC): This project promised to revolutionize sports fan engagement through DeFi applications. Then, earlier this month, concerns arose when the developers abruptly locked their liquidity pool, preventing investors from selling their DSC tokens. The price subsequently plummeted, and the developers have gone silent, suggesting a potential rug pull.
Socialverse (SRV): This so-called decentralized social media platform was essentially a META x DSC copycat killer. Developers rode the metaverse wave until its price popped off, then locked down trading and disappeared with investor funds.
And those are just from this month alone. Over the course of the year, other notable rug pulls include:
Unrealistic Promises: Beware of projects promising guaranteed returns. Legitimate cryptocurrency projects aren’t get rich quick schemes, but rather focused on building long-term value and solving real-world problems.
Lack of Transparency: Rug pulls are often betrayed by the absence of a detailed whitepaper outlining the project’s goals, roadmap, and team. Anonymous development teams in particular are cause for concern. Look for projects with doxxed teams and clear development plans.
Unlicensed or Unregistered Projects: Reputable cryptocurrency projects are often registered with financial authorities. Unlicensed projects operate outside regulations, increasing the risk of scams.
Overemphasis on Endorsements: While celebrities can bring attention, their involvement doesn’t guarantee a project’s legitimacy. Focus on the project’s fundamentals, not just who’s promoting it. Conduct your research and consult with financial advisors before investing.
Low Trading Volume: A sudden drop in trading volume after an initial pump can be a warning sign. Rug pullers often create artificial volume to inflate the price initially.
Social Media Bots: Be wary of social media accounts with suspicious activity, like repetitive positive comments or a sudden surge in new followers. Rug pullers sometimes use bots to spread hype and create a false sense of community.
With all the editorial focus on scams lately, we felt it’s important to include this reminder that falling for them can be avoided. Just conduct thorough research, prioritize projects with clear goals and transparency, and remember reliable information about crypto projects is out there via reputable news sources or blockchain analysis firms.
Also, while meme coins may have found popularity as the quickest path to big gains, they’re far from the only one. Consider alternative investment strategies within the crypto space, like buying into established tokens with a proven track record. At the end of the day, if it sounds too good to be true, it probably is.
—Muhammed
Is your hard-earned crypto burning a hole in your pocket? Maybe hold off on buying 5 minutes of a Wu-Tang Clan album and transfer it into $SOL instead. You may have to HODL it for a few more weeks, but you’re not going to want to miss out on this.
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Fill out this form to request traits you’d like to see included in the first collection, and join our Discord to vote on designs, participate in giveaways, and more.
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Bless Your SOL
You’d never know it outside of the Twitterverse, with Solana’s price at a relative low and industry news mostly servicing as a mouthpiece for Ethereum and layer-2 solutions (L2s), but there is a tsunami of positive news coming from builders across the $SOL ecosystem.
First, the Solana Foundation and Solana Labs announce the release of “blinks” — blockchain links that utilize the existing Open Graph Protocol standards (i.e. the way most social media sites reshare posts from other websites) then overlays additional functionality in the browser from participating wallets that are installed as plugins. As a product guy, my hats are off to the devs who saw this opportunity that is so obvious in hindsight.
Last bull cycle, there was substantial hype around a decentralized social media platform called Farcaster. It eventually pioneered Frames, which would allow anyone with an account on Farcaster and a participating wallet to embed transactable inline frames into other websites.
Farcaster engagement has fallen substantially since then. But the spirit of its innovation lives on in blinks, which provides similar functionality to Frames, but makes it as easy as sharing a social media post. This lowers the friction to adoption by effectively integrating with all social platforms, X first and foremost.
On top of blinks, three Solana ETFs have now publicly filed for listing. Back in January, the approval of Bitcoin ETFs arguably ignited the ongoing bull cycle, with the approval of Ethereum ETFs in late May adding further fuel to the fire. If Solana ETFs follow in their footsteps, it could potentially provide a boost to the token’s value and the market as a whole.
Finally, Solana introduced ZKcompression, which allows for a data storage at a 160-1500x more efficient rate, directly on-chain. This utility would be an essential requirement of any truly decentralized application, so it’s nice to know it’s out there already.
At a 5:1 discount based on market cap alone, our money — and, arguably, the smart money — is on Solana over Ethereum for breakthrough consumer adoption. Solana is a potential paradigm shift for the way we interact with the internet waiting to happen. L2s are really expensive direct competitors to Google Cloud, AWS, and Microsoft Azure. Which would you pick?
—El Prof