How to Spot a Rug Pull Before You Buy: 9 Warning Signs
7 min read · Updated
A rug pull happens when the people behind a token drain its liquidity or dump their supply, leaving everyone else holding tokens worth almost nothing. They are the most common way new-token traders lose money, but most rug pulls leave clear warning signs on-chain before they happen. Here is what to look for.
1. Liquidity is not locked or burned
When a token launches, the developer adds liquidity: a pool of the token paired with SOL, ETH, BNB or a stablecoin. Whoever holds the liquidity-provider (LP) tokens can withdraw that pool at any time. If the LP tokens are not locked in a time-lock contract or sent to a burn address, the developer can pull the liquidity in one transaction.
On CoinsWavez, the token page shows what percentage of liquidity is locked or burned. For a new token, anything below about 80% deserves caution.
2. Very little liquidity for the market cap
A token with a $2M market cap but only $20K of liquidity has a liquidity-to-market-cap ratio of 1%. That means even moderate selling moves the price dramatically, and the "market cap" is mostly an illusion. Healthy small caps usually have 10% or more of their market cap in liquidity.
3. The contract can still mint new tokens
If the owner can mint, they can create unlimited new tokens and sell them into the pool. On Solana this is called mint authority; on EVM chains (Ethereum, BSC, Base) it shows up as a mint function controlled by the owner. Serious projects revoke mint authority or have a fixed supply.
4. Freeze authority is active (Solana)
Solana tokens can have a freeze authority that lets the creator freeze any wallet holding the token. A frozen wallet cannot sell. There is almost no legitimate reason for a memecoin to keep freeze authority.
5. The owner kept dangerous powers (EVM)
On EVM chains, check whether ownership is renounced. If not, look for owner functions that can hurt holders:
- Pause trading or transfers
- Blacklist specific wallets
- Change buy or sell tax at any time
- Reclaim ownership after "renouncing" it
- A hidden owner that is not the visible owner address
- An upgradeable proxy, meaning the whole contract can be replaced
6. A few wallets hold most of the supply
If the top 10 wallets (excluding the liquidity pool, burn addresses and lockers) hold more than half the supply, a handful of people can crash the price whenever they want. A single wallet holding over 15% is a major red flag, especially if it is the creator.
7. Buying works but selling does not
This is a honeypot, a special kind of rug pull. The contract lets anyone buy but blocks or heavily taxes selling. The chart only goes up because nobody can sell. A sell simulation detects this. See our guide on honeypot tokens for more.
8. Suspicious trading patterns
Watch for volume that is many times larger than liquidity (often wash trading to fake activity), almost no sell transactions (a sign that selling is restricted), or a price that already dropped more than 80% in a day, which usually means the rug already happened.
9. No website, no socials, anonymous team
Plenty of legitimate memecoins are anonymous, but a token with no website, no X/Twitter and no Telegram has nothing at stake and nothing to lose by disappearing. Combined with any of the on-chain signs above, it is a strong reason to walk away.
How to check a token in under a minute
Paste the contract address into the CoinsWavez rug pull checker. It checks every sign above automatically and combines them into a Sniper Score from 0 to 100, with a plain-English reason for every point gained or lost. A high score is not a guarantee, but a low score is a reliable signal to stay away.