Rug pull red flags
Most of what goes wrong with a new token is visible on-chain before it happens. Here is what to look at, roughly in the order that catches the most problems for the least effort.
1. Liquidity that can walk away
The fastest way a token becomes unsellable is the pool being emptied. Find out who holds the liquidity position and whether it is locked, burned, or sitting in somebody's wallet. The full check takes five minutes.
Watch for a lock that covers a fraction of the pool, or expires shortly, or sits in a contract with an owner who can end it early.
2. Supply concentrated in a few wallets
Open the token on the block explorer and read the holders list. If a handful of addresses hold most of the supply, the price depends on their patience rather than on the market. Locked liquidity does not help here: they can sell into the pool and leave it drained.
Look past the top holder. Supply split across ten fresh wallets that all received tokens in the same block is one holder wearing hats.
3. A token that can mint more
Read the token contract on the explorer, and first confirm its source is verified at all. An unverified token contract on a chain where verification is free is a decision, not an oversight.
Then look for:
- A mint function, and who can call it. New supply from nowhere dilutes everyone.
- An owner that can pause transfers, which stops you selling while they sell.
- A blocklist that can freeze specific wallets, quite possibly yours.
- Transfer fees that can be changed after launch, including up to one hundred per cent.
- An upgrade path, which lets all of today's answers be replaced tomorrow.
4. Team tokens with no schedule
A team allocation sitting in a plain wallet can be sold at any moment. Vesting over a couple of years says considerably more than a lock that expires in a month, because a lock ends in a single cliff edge where everything becomes sellable at once.
Check the amount against total supply rather than the headline figure. A hundred million tokens can be a rounding error or most of the float.
5. Claims that cannot be checked
Screenshots of locks. Audits with no published report. A partner logo with no announcement from the partner. Every honest version of these has a link behind it that goes somewhere you can verify without asking the team. If you cannot find one, treat the claim as not made.
Follow links yourself rather than through theirs. A link in a team's own post can point at a page they control.
6. Pressure to hurry
Not everything worth noticing is on-chain. A deadline that punishes you for checking is doing a job, and it is not a job that benefits you. The checks above take fifteen minutes. Anything that cannot survive fifteen minutes of scrutiny is telling you something.
A short checklist
- Who holds the liquidity, and until when?
- How concentrated is the supply, really?
- Is the token contract verified, and can it mint, pause, tax or block?
- Are team tokens vesting, and what share of supply is it?
- Does every claim have a link you can follow to the chain?
For tokens on Robinhood Chain and Arc, the Lockbox explorer answers the locking half of this in one search, with no wallet and no account. It shows what is locked, what share of supply that is, when it unlocks and how much has been burned.