CoinGecko, a renowned platform for tracking cryptocurrency and NFT prices, has launched a new tool designed to protect users from rug pull attacks. Let's look at the functionality of this tool and its importance to the crypto community.
What is Rug Pull and Its Consequences
On June 18, CoinGecko confirmed through their blog that they developed a tool to help users avoid rug pull attacks. A rug pull in the NFT space is a scam where developers abandon a project after attracting investment, often disappearing with investor funds. This leaves investors with worthless tokens or coins and significant financial losses. The total number of crypto and NFT tokens has risen to over 7 million since 2021, with many quickly losing their value. In most cases, project founders appeared genuine but ended up defrauding investors.
How the Rug Pull Detector Tool Works
CoinGecko has launched a new dashboard tool allowing users to use Bubblemaps on GeckoTerminal to avoid the next rug pull. Bubblemaps visualizes token distributions and wallet connections, helping users quickly spot supply concentration, wallet clusters, and suspicious activity. To access this tool, users must search for any token on GeckoTerminal and click the ‘Bubblemaps’ tab. A healthy bubble map should show well-distributed token holdings across many wallets without dominant clusters or whale concentrations, while red flags to watch for include large bubbles and uneven distribution.
Examples and Usage Recommendations
In its blog, CoinGecko provided recommendations for using Bubblemaps. Users should focus on token distribution across wallets and heed signs indicating potential fraud, such as large volumes created for price control and uneven distribution. Awareness of the risks and careful attention to token distribution can significantly reduce investment risks in cryptocurrencies and NFTs.
The launch of CoinGecko's new rug pull detection tool is a significant step in protecting users from fraud in the crypto industry. Being informed about how such tools work and carefully monitoring token distributions can greatly lower risks for investors.
