How To Spot a Potential RUG — Clear signs something is sketchy
Tags: Binance Smart Chain, Ethereum, Cryptocurrency, Crypto, Defi

How To Spot a Potential RUG — Clear signs something is sketchy

Disclaimer: This article is quite lengthy. Get yourself a coffee, get rid of distractions, and make sure you read it carefully.

Rugs… too many in just a short period of time.

Well, people got experience from other blockchains and came on BSC for quick cash as it should’ve been expected.

The number of rugs has slowed down a bit in the last couple of days, but is it over? No, and rugs will never stop appearing.

But can we learn how to spot sketchy aspects of a project?

Yes! And that’s what we’re going to be discussing today.

I will try to explain in great detail the points I made clear in the tweet above, along with others that I deem necessary.

Okay, I’m taking too long, here is a table of contents:

Short list of what I look for

When it comes to a new project I have a list in mind of what I should look for. I’ll first give you the list here and then we can discuss each one in particular.

Careless and rushed developers

Overall appearance

Social Media Management and Appearance

Social Media Proof

Intrusive marketing

Contracts

Keep in mind that those are just potential red flags that should alarm you, but that doesn’t mean the project is 100% safe or a scam. I'll explain the point above in the " The most important thing " part.

Careless and rushed developers

This will be the first red flag I’m going to be discussing today.

Rushed projects

Rushed projects appear overnight and in less than 12 hours (most of the time) they have:

A website done

The farms live

Thousands of followers

An airdrop/giveaway with somehow thousands of likes/retweets

I also notice that the domains are registered just hours before launch, a major red flag for me, since it obviously takes more time to prepare a great project, but it only takes a few hours to fork an existing one.

How to check when a domain was registered

This one is easy.

Example of domain registration date.

Just go to whois.domaintools.com, paste the link in the search bar, and then scroll down to “dates” to check how old a domain is.

Careless developers

Here we’ll have to check the contracts.

Most often than not fly-by projects don’t even edit their forked contracts properly, leaving clues that the project is rushed and the developers are careless.

Example of a careless and rushed developer.

The example above is taken from the infamous WineSwap rug-pull, where the MasterChef contract wasn’t even fully edited and the developers left in the main names of the Sushi functions.

A major red flag for me.

Overall appearance

Maybe the first thing that comes to mind to most people is to check contracts, but I like to do that as the last task.

Why?

Checking how the overall website looks gives me an idea about how much the developers have actually worked on the project before release.

Here I can even decide if it is worth investing in the project or not.

I tend to take a brief look around the website, mainly checking for:

Overall UX/UI

Information/Links to information

Uniqueness (yeah, I know, I’m cherry-picking at this point)

What I consider red flags when it comes to the overall design of a website

Let’s take this random project I found on Twitter as an example.

A brief look at phoinikas.finance

I’ve found this project on Twitter after I was tagged by CryptoDeus in a post related to it, where he makes clear his concerns about it and warns people it might not be that safe to enter.

I’ll be honest with you, after checking out the website I feel the need to wash my hands…

Here are some immediate red flags I see:

The website is just a rushed fork of SushiSwap.

fork of SushiSwap. The whole design seems to be made in a few minutes, without even trying to make it look good.

There is no link to their MasterContract anywhere in sight.

The “Lending” and “Insurance” buttons only display a “coming soon” message, without any info about them anywhere.

A quick check on their Medium (which is linked at the bottom of the page) even confirms that the project is rushed, no story ever being written on their account.

I’m not even gonna talk about the logo which is a pure joke.

This must be a joke.

I’ll rate the website appearance 1/10.

It isn’t mainly about it looking bad, but more about the fact that it is clearly rushed, and when you rush something you’re clearly only looking for the end-goal, ignoring the path along the way.

Not a good sign in my book.

Social Media Management and Appearance

In this step, we’ll take a look at how social media is handled by the team.

Because I like to be extra-careful and cherry-pick the projects I join I’ll also take a look at the overall appearance.

What I’m looking for:

Medium-high social media activity.

A flood of information about the project.

Great appearance (not a necessity, but a nice thing to see).

Let’s compare one of the first tweets of PancakeSwap to the first tweets of “Phoinikas”.

One of the first tweets of PancakeSwap.

You can see:

Great branding.

Clear information.

Hashtags for organic reach.

A link to their first-ever Medium article that gives lots of information about the project.

Overall a nice tweet. I like it.

Now let’s take a look at the first tweets of “Phoinikas”.

The first two tweets of Phoinikas.

You can see:

Awful branding using only images found on the first page of Google Images (that are 300x300 pixels I might as well add).

Absolutely no information about the project.

No link to a Medium article explaining what the project is all about.

An airdrop of their token which at that time had absolutely no use-case and not even a website.

Inconsistency and small grammatical errors (again, I’m cherry-picking, I’m aware of that).

Horrible tweets.

Also, the airdrop (at least for me) is kinda sketchy. Trying to market the project even before it is released.

Airdrops are a common thing projects do, especially new ones. But for me it can be a red flag. I'd like to encourage you to form your own opinion about everything. You have to decide what is a red flag for you and what isn't.

I also took a look around their Telegram group.

Tons of questions that were not responded to, some people were even asking “when rug?” and people that sent their wallet addresses (for the airdrop) were being banned.

I’ll rate the social media management and appearance 1/10.

Social Media Proof — Fake or real?

Here comes my favorite thing, social media proof.

When it comes to a new project I can forgive the not-so-appealing website appearance and maybe try to not be too harsh on the social media management, but I’ll never forgive fake social media proof (fake likes, fake followers, fake Telegram members, etc).

Buying Twitter followers and Telegram members is extremely cheap, especially if you buy directly from providers and not from resellers (Not gonna teach you how, don’t even ask. Never buy fake social proof, it only hurts your growth).

The prices from the providers.

As you can see, you can buy 5,000 Twitter followers and 5,000 Telegram members for a whopping $20.30 USD.

Never fall into the trap of fake social proof.

How to spot fake social proof.

Let’s first learn how a fake Twitter account (a bot) looks like.

Disclaimer: The ones below are the usual bots you'll see and in terms of fake accounts sellers rate them as "low-quality". There are other types of fake accounts that entirely copy one's social media profile, only changing the username. Those are rated "high-quality" and harder to spot.

How to spot fake Twitter followers

Fake accounts are easy to spot, especially the really cheap ones as stated in the disclaimer above.

Examples of fake accounts.

The cheap accounts are clearly bot accounts and easy to spot on their own, look for:

Non-custom names (having the same name as their username).

A lot of numbers for uniqueness.

No description, info.

No photo, fake photo of another person (usually women), or photos of random objects.

Their tweets are nonsensical or they just retweet random things (you can even find the past clients while checking out a bot’s account).

How to spot fake Telegram members

Fake Telegram members are also semi-easy to spot.

Example of fake Telegram accounts.

As you can see there is a similarity here:

Many numbers in the username

Clearly fake photos

Trying to impersonate women (usually)

Let’s also see an example from WineSwap’s Telegram group.

Example from WineSwap Telegram group.

These are higher quality.

In the example above you can see that after mass-joining the fake accounts only typed “hi” and “hello”, clearly not natural.

But, what makes spotting fake social media proof extremely easy is checking the followers list as a whole.

It is easier to see batches of fake accounts rather than trying to pick them individually.

Let me show you.

Let’s take a look at Phoinikas.Finance’s social media.

Seems like they have 1,796 Twitter followers and 1,841 Telegram members.

Okay, it doesn’t seem like much, does it? Well, it kinda is if you ask me, but not as much to raise immediate red flags.

WineSwap raised so many red flags at first because in their first day they had over 5,000 followers on Twitter and over 5,000 Telegram members.

But, let’s check them as a whole, should we?

First, Twitter!

Let’s take a quick look at the accounts that follow Phoinikas.Finance on Twitter.

Accounts that follow that project.

Okay… well, I think that’s obvious enough and doesn’t need to be explained.

Let’s check who liked their posts, those must be real people!

Accounts that liked their posts.

Okay… there is still hope on their Telegram!

Secondly, Telegram!

Please be real people…

The members on their Telegram group.

I think I just lost faith in humanity at this point.

I need to do something real quick…

I’ll be right back.

I’m back, had to wash my hands a second time.

It is extremely obvious that the project bought fake Twitter followers, likes, and Telegram members.

Also, you can see a discrepancy when it comes to the engagement on their Twitter posts.

Post #1 has: 1 comment, 4 retweets, and 19 likes.

1 comment, 4 retweets, and 19 likes. Post #2 has : 2 comments, 12 retweets, and 35 likes.

: 2 comments, 12 retweets, and 35 likes. Post #3 has: 2,300 comments, 2,600 retweets, and 2,300 likes.

2,300 comments, 2,600 retweets, and 2,300 likes. Post #4 has: 3 comments, 5 retweets, and 21 likes.

There is a clear discrepancy between the engagement the giveaway had and their other posts. Yes, a giveaway is supposed to get more engagement, but not that much.

Tip: If a random project that's one or two days old already has thousands of followers it should immediately be a red flag for you and you should start looking into it.

Anyway, at this point, I think it is clear that the above project bought some fake stuff to make it look more legitimate.

Let’s move on to other things you should look for.