Are Hyped Projects Potential Rug Pulls?

AuthorAuthor

Mark Kennedy & Manuel Olumorin
February 24, 2023

GM GM. Another Friday, another loot from your beloved, Lootbox.

Let's get to it. Today we have

  • Someone went digging to answer the question - Do hype and rug pulls go together?

  • Coinbase drops an L2

  • The Sneakies - GTA 6 may get cryptocurrency?

Rug Pulls and Hype: Correlation or Coincidence

Recent rug pulls in the web3 space have left many investors and enthusiasts reeling, wondering how such scams could happen. Some have associated heavily hyped projects with scams.

Web3 Rug Pull

So some folks went digging and shared their insights.In a recent Twitter thread, user @KEMOS4BE with the help of user @slorgoftheslugs analyzed over 15,000 NFT projects on Magic Eden (Solana NFT Launchpad/Marketplace) to see what happened to "Hyped" projects post-mint.

What they found in a few words, no bueno (not good).

Let's get to the details of their findings

Out of the 15,000 NFT projects, 200 met their criteria of hyped projects. According to them, 99% of these projects didn't make it. Worse yet, many may have been rug pulls.

5 projects that tell the story of the rest

Art of Mob: The project rug pulled for over 2,400 SOL, leaving investors with worthless tokens. The team behind the project also allegedly reused the code from a previous project, raising questions about their diligence and authenticity.

Kings of Da Street: The project rug pulled for over 5,000 SOL, and the team behind it disappeared without any explanation. Many investors lost their entire investment in the project.

Lux Real Estate: The project rug pulled for over 6,000 SOL, leaving investors with no way to recover their funds. The team behind the project also allegedly stole the code from another project, adding to the suspicions of rug-pulling and dishonesty.

Cops Game: The project had suspected connections to a slew of other rugs, although this has not been confirmed. It had the same source code with references to the other projects, and some of the other wallets had very large amounts of the Cops game token $LOOT.

Defi Pirates: The project involved many high-profile individuals in the space, and people like @HGESOL lost over 2,000 SOL on the rug. The team delayed the game 5-6 times, overpromised and underdelivered, and had no system of accountability, leaving both whales and retail investors in the lurch.

Why these projects?

These projects, of all the projects whose data was scraped, were all quite hyped and promoted by platforms and influencers alike.

The message delivered

Coinbase Launches L2 on Ethereum Called BASE

Coinbase gave us literal blue balls 🔵 with this Twitter post.

Now it's finally been revealed. The blue ball is Base.

So what's Base?

Here's the rundown

  • It's an Ethereum layer-2 network that will support Coinbase's on-chain products and create an open ecosystem for decentralized applications (dapps) to attract more users. Layer-2 networks, like Base, help make transactions faster and cheaper than an underlying blockchain.

  • Base will be “a rollup agnostic superchain powered by Optimism,” and it won't launch a network token.

  • It has been live on testnet since the beginning of February and is expected to launch on mainnet in the coming months.

  • Several partners, including oracle network Chainlink, Ethereum block explorer Etherscan, and DeFi protocol Aave have jumped on to support the network.

  • Coinbase is the first publicly traded company to launch a layer-2 blockchain network on top of Ethereum.

The launch of Base is a significant step for Coinbase and the wider web3 ecosystem. It represents the company's bet on the potential of decentralized applications to attract more users in the coming years. With Base, Coinbase hopes to create a more open and accessible platform for developers to build dapps and for users to engage with them.

That said, the internet had its usual reaction. No one can win unanimously, right?

Some praised the launch, while criticisms like this tweet rolled in.

Lootbringer's take

This is what makes building in crypto both fun and frustrating. Too many options.

And this is another chain web3 developers, including those in gaming, should pay attention to.

Why?

This development opens up another Ethereum layer-2 network to leverage its benefits, such as faster and cheaper transactions. With Base, there could be access to the 110 million users on Coinbase, depending on how they decide to have both platforms interact.

The Sneakies

Love what you just read?

Forward to a friend or share it on social media using the social media buttons at the top of this email.