With the current hype around NFTs recently, it is not surprising that a lot of new projects are rapidly growing in the market. Relating to this case, NFTs are a popular topic among many social media users which is usually Twitter and Discord, who tag and spread new projects to other enthusiasts.
To make sure you don’t get scammed, we will mention about 8 NFT red rugs and how to be careful so that you can make an NFT project through legitimate procedures.
1. Anon Team
Among the alarming anonymous artists, there is has been mention of Anon or “undoxxed” teams. Sometimes a portion of the team may be doxxed for various reasons. Although, at least 50% of the team must be completely doxxed and findable on social media, etc.
Moreover, even though there is a picture of the person on the website doesn’t justify that the person exists. That picture can be stock photography or AI / ML generated images such as this “This Person Does Not Exist”. You can hit refresh and see more examples on this site.
2. Fake Account Along with Fake Followers
Nowadays, it is easier than ever to buy either older established Twitter accounts or even purchase followers. Additionally, to check the Twitter of the project you must target to research as well as research the Twitter accounts for the “team” behind the team.
Currently, there consist of several red flags. If the age of the account is too old which is older than the NFTs have been popular, it is more like it is a re-purposed account for NFTs. If there is a massive following of that Twitter account, you have the option to run it through a Twitter audit and check what percentage of the followers are fake.
3. Costly (or Free) Mint Price
As the days go by, we are witnessing more and more projects which are launching with a premium price tag for the NFT. The current hype cycle is disrupting the price discovery and permitting creators to claim more of the original mint price than they used to in the past. This is alright for certain projects but one must always proceed with caution.
If it doesn’t feel legitimate then it’s not worth overextending to chase a project. Moreover, one should not chase a project if any of the other blocks are checked indicating that it is a risky project.
4. Limited Art
If you find artists who are not extremely well established but have a portfolio that you can check for a review then you should look for a wide array of art, traits, etc. It is more convenient to pay a Fiverr artist to come up with a few concepts that look like they have the potential of widely differing variety and rarity. Moreover, if you don’t find the art which resonates with you then it’s better to give it a pass.
5. Copy Paste Website
Copypasta’s website consists of teams of high-risk projects of designs and incorporation. Copy Paste projects started to spread like viruses after an early version of the banana repo was founded on Github. This version had an entire NFT project deployment (soup to nuts) available for anyone to download as well as edit.
Nowadays it is seen that coordinate groups will deploy many projects in a single day. All these projects are slightly different art or website customization. Keeping track of the project is essential to see what projects may look similar to each other and help to prevent pitfalls.
6. Lacking Innovation
The final area where you should be concerned relates to the project is around the road map. You have to identify whether the project is under or over-promising on the road map. The reason behind this is both of these can be a massive red flag for a project. If the project essentially has no road map available then it won’t have the additional utility after launch.
In addition, if the project is over-promising then you should be worried too. Nevertheless, you should have a basic understanding of your laws and regulation around securities of your countries because it might become a long-term rug.
It is a violation of OpenSea ToS for project creators to sweep their floors which is not common knowledge. The projects can lose their blue checkmark etc if they commit that. Moreover, if projects which include moderators are extremely controlling of valid critique and projects, It indicates that something else might be going on behind the scenes.
It is estimated that 99/100 times a derivative is a rug. Some outliers are not common though. Using the blockchain, it is very easy to copy metadata, art, etc, and make some basic changes. There are various examples of derivatives where an idea is taken and blended with something else to make it completely unique and claimed at its own creation. Although, if you are unsure of your decisions then it is better to skip the project altogether.
Most projects that are not even meant to be rugs are designed to eliminate you from the ETH. It is best advised to approach every project as a skeptic. Do extensive research, exam the teams, roadmap regularly, and so on. If you miss a project then don’t worry there will be another 35-50 tomorrow.
Come up with a strategy by doing your own research which works for you. Most importantly, scammers have the specialty of looking at the latest trends as well as techniques and then combining them with their skills to exploit human nature by taking advantage of their prey. Therefore, knowing the 8 NFT rug red flags and how to be careful can prevent you from falling in the wrong hands.
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- Snoop Dogg & Other NFT Collectors Moving To Tezos And Solana
- Four Tips To Building Your Name In The NFT Community
Some Important Tips For Precautions
- Look for your tribe- FInd a discord community that has a proven track record of vetting projects and open communication/ dialogue regarding the pros and cons of a project.
- DYOR – It is highly advised to cross-reference artists, websites, mint pages, etc. 5 minutes of research can help you to save thousands of dollars of potentially lost ETH if you mint a rug project mistakenly.
- If you have any slight doubt, it is better to pass on the project.
- Never use google for projects. However, if you do, make sure you validate it from both discord and Twitter for an accurate mint page.
- Never sign anything that you have opened from an email. Rather use a different browser for your email and wallet.