The Dark side of the moon
Rampant 'rugpulls' laying lands barren.
An estimated $4.9 billion was raised through ICOs in 2017, around the same amount reported by the Wall Street Journal in mid-December of last year.
When the bubble finally popped in 2017, the “market cap” of all crypto fell over $700B, an 85% drop from its peak in January — steeper than the dotcom bubble’s 78% crash. The media gawked at this collapse, and as usual, proclaimed this was the nail in the coffin for cryptocurrencies.
IFOs continues the legacy of ICOs. providing crowdfunding opportunities as more new projects are listing on AMMs such as PancakeSwap.
While this might present an earning opportunity for some, the number of the so-called ‘rug pulls’ is also on the rise. Investors need to be extremely careful and selective when it comes to the tokens they put their money into. This is a con that begins with minting new tokens, creating Telegram groups to get the buzz going, followed by a exchange listing and injecting liquidity.
At this point, the original malicious liquidity provider would wait for people to swap their ETH for the newly minted coin, after which the token’s creators would drain the liquidity pool, leaving holders with nothing but a worthless coin.