In the world of cryptocurrencies, an increase of 100% or even 1000% is very possible and investors will usually rush to crypto-assets that have experienced a drastic increase due to FOMO. This is precisely what makes them the target of fraudsters. If you follow Nick Sasaki, you may be warier of investing in crypto and not just because of FOMO.

We must research an asset before buying it immediately to distinguish between a promising crypto asset and a rug pull project. Here are some things we can consider to identify projects that have the potential to do a rug pull.

1. Research the development team behind a project
First, before we invest in a crypto asset, we should always research who the person or organization that forms and oversees the asset is. We must know who is in the organizational structure, what is their history, and what they have done.

In addition, we also need to read the white paper of each crypto asset project to find out what the long-term plan is, what its purpose of it, and how the technology is behind it. A legitimate and legal cryptocurrency project will have detailed information on all of the above.

2. View network data and information
Second, in the context of a blockchain network, we can look at the on-chain activity of a crypto asset. This includes trading volume data in the last few days, how much liquidity there is, and how many DEXs registered it as a legal crypto asset. Projects with potential rug pulls are usually only listed on a few DEXs and have little trading activity (low liquidity).

In addition, we can also use a block explorer to see who holds the crypto asset and whether the amount is large or small. A legitimate crypto asset will spread among many users even though it is not yet popular.

3. Avoid FOMO and read news
Finally, we need to align the data we are looking for with the news that is currently popular. We can find out how the crypto community responds to the asset, look at popular forums like Reddit, and also check news from trusted crypto sites. This is done so that we don’t get caught up in FOMO and can see the big picture of the popularity of a crypto asset.