# Rug pull `kaal:entity:rug-pull` **Status.** derived This node is assembled mechanically from the 13 claims that carry the concept tag `rug-pull`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 13 claims across 3 works, 2022 to 2023. **2022** - [4015908-025](https://wulfkaal.github.io/claims/4015908-025) [mechanism/argued] *(failure mode)* -- Community DAO governance makes any form of rug pull much less likely, because rug pulls typically benefit only a few select individuals who retained control over the project code or liquidity. > Community DAO governance also makes any form of rug pulls much less likely as rug pulls typically only benefit a few select individuals who retained control over the project code or liquidity. Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908 - [4015908-029](https://wulfkaal.github.io/claims/4015908-029) [design/argued] -- Technology platforms can make launch abuses less likely by mandating fair auctions in which tokens are released only in tranches, offering a limited number of tokens for a limited number of days, which makes rug pulls overall less likely. > During such fair auctions, the tokens that are listed on the fair launch platforms may only be released in tranches, which makes rug pulls overall less likely. Such token tranche listings may offer a limited number of tokens for a limited number of days. Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908 - [4015908-030](https://wulfkaal.github.io/claims/4015908-030) [design/argued] -- After half of each auction tranche is deposited into an AMM pair, the other half is allocated to open market purchasers and the remaining liquidity on the AMM is burned to ensure that any incentives for rug pulls are removed. > Thereafter, the other half of the tokens from the respective tranche may be allocated to open market purchasers. The remaining liquidity on the AMM may be burned to ensure that any incentives for rug pulls are removed. Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908 - [4015908-041](https://wulfkaal.github.io/claims/4015908-041) [mechanism/argued] *(failure mode)* -- Rug pull practices can take the form of a whale guaranteeing an inside developer or business head a percentage participation if that insider changes the code governing the project to produce an outcome that benefits only the whale and its associates. > example, a whale may guarantee an inside developer or business head a percentage participation if the insider changes the code that governs the project for a beneficial outcome that only benefits the whale and its associates. Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908 - [4067783-001](https://wulfkaal.github.io/claims/4067783-001) [failure/asserted] *(failure mode)* -- At their worst, DAOs produce ponzi schemes and rug pulls, and these failures damage the credibility and future of web3 as a whole, not just the individual project. > At their worst, DAOs result in ponzi schemes and rug pulls that undermine the future of web3 and associated upgrades for humanity. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-003](https://wulfkaal.github.io/claims/4067783-003) [empirical/evidenced] *(failure mode)* -- Rug pulls grew sharply as a share of crypto crime: of the $7.7 billion in total illicit crypto revenue in 2021, 37 percent came from rug pulls, up from 1 percent of illicit revenue in 2020. > In 2021 alone, the total illicit revenue from crypto scams was $7.7 billion; 37% of that total resulted from "rug pulls," an increase from the 1% of total illicit revenue in 2020. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-006](https://wulfkaal.github.io/claims/4067783-006) [failure/argued] *(failure mode)* -- The author contests the myth that DAOs are generally run by scammers: many DAOs and users have indeed fallen victim to rug pulls, but most of those rug pulls trace to the absence of decentralized governance in fundraiser DAOs rather than to DAOs as such. > While it is true that many DAOs and DAO users have fallen victim to the infamous rug-pulls, most of these rug pulls are associated with the lack of decentralized governance in fundraiser DAOs. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-007](https://wulfkaal.github.io/claims/4067783-007) [empirical/evidenced] *(failure mode)* -- DAO projects accounted for a material share of the largest crypto frauds of the year: two of the top six crypto rug pulls in 2021 were DAO projects. > Of the top six crypto rug pulls in 2021, two were DAO projects. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-008](https://wulfkaal.github.io/claims/4067783-008) [empirical/evidenced] *(failure mode)* -- A DAO token sale can be drained at the moment of closing: in the Anubis DAO sale 13597 ETH was removed from the token sale pool and sent to another address as the sale was about to close, and because the launch platform had not been compromised the loss was attributed to an inside rug pull. > As the sale was about to close, 13597 ETH was removed from the token sale pool and sent to another address. Allegations of a rug pull ensued because the launch platform Copper had not been compromised. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-009](https://wulfkaal.github.io/claims/4067783-009) [mechanism/argued] *(failure mode)* -- Most DAOs that suffer unethical behavior and rug pulls are abused by insiders, and this is possible because insiders are not properly governed and hold too much control over the DAO; true decentralized community governance removes insider and council control over keys and code. > Most DAOs that fall victim to unethical behavior and rug pulls are subject to abuses from insiders. Typically these insider abuses are possible because the insiders are not governed properly and have too much control over the DAO. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-010](https://wulfkaal.github.io/claims/4067783-010) [empirical/evidenced] *(failure mode)* -- Insider knowledge of contract internals is itself an attack surface: at Snowdog DAO an insider who knew a challenge key embedded in the DAO contract backran the anticipated buyback and sold tokens ahead of it. > For example, Snowdog DAO suffered an alleged rug-pull when an insider who knew a "challenge key" (a part of the DAOs contract), backran the anticipated buyback and began selling tokens. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 - [4067783-012](https://wulfkaal.github.io/claims/4067783-012) [mechanism/argued] *(failure mode)* -- The absence of proper decentralized governance built on non-fungible tokens is a key common denominator across DAO failures and rug pulls. > The lack of proper decentralized governance with non-fungible tokens is a key common denominator among DAO failures and rug pulls. Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783 **2023** - [4529715-029](https://wulfkaal.github.io/claims/4529715-029) [failure/evidenced] *(failure mode)* -- Lobby3 was effectively attacked from within: founders maintained heavy control and slowly diverted funds to themselves, producing a very slow rug pull. > Because the founders maintained heavy control and slowly diverted funds to themselves, the DAO suffered from a very slow rug pull. Wulf A. Kaal, Josh Bykowski, Decentralized Autonomous Organizations (DAO) – A Market Meta Analysis (2023). SSRN: https://ssrn.com/abstract=4529715 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/rug-pull.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.