RUGCHAIN

More and more rug pulls are being created on the Binance Smart Chain every day. It has become a daily occurrence for project developers to drain the liquidity of a project leaving gamblers in a state of disarray.

This infection of scam projects we see in BSC seems to be mainly driven by gas fees and exchange fees. As the price of gas has gone up for ETH, fewer rug pulls are occurring on the Ethereum blockchain. Most of these scammers appeared to have migrated to other side chains where fees are lower. 

The interesting thing about these rug pulls is that they are made on a more centralized blockchain than the Ethereum blockchain. On BSC, Binance has more control over what funds enter and exit the blockchain. This means they’re more likely to shut down wallets of scammers. 

A potentially massive rug pull to come out this week is Safemoon. 

On April 20, DEFI white knights, WARONRUGS, gave a scam advisory on Safemoon because its owner owned more than 50% of the liquidity. Just before this advisory went out, SAFEMOON surged by more than 1155% in 5 days. A day after their advisory, WARONRUGS gave an update saying 54% of the liquidity was locked up, but there was still a threat that some of the tokens are still in the deployer’s wallet. Which was later sold off.

Many crypto influencers have been skeptical of this skyrocketing token calling it anything from a pyramid scheme to a soon-to-be rug pull. But that hasn’t stopped TikTokers and low-level investors from pumping the token even more. The growth of the coin and the fact that it’s on BSC makes it seem like a very skeptical project. But, who knows, this might be the next Doge just based on its social media influence and growing adoption.

So why do these rugs keep on happening on BSC? Why do people keep on getting in on these rugs? 

Countless scam projects are being made and funded every day. Many of these scam projects are supported by investors searching for the next big project. It looks like people would rather gamble a small amount of money in hopes they could get out before the rug pull than burn a larger amount of money on ETH gas and trading fees. People aren’t dumb; it’s just more convenient to trade on a place with lower fees. This is why there are so many new scam projects created on the BSC.

But out of all of this, these rug pulls might bring up a bigger question about the ETH blockchain. Will high gas fees stall the growth of the ETH blockchain as smaller investors are discouraged by them? Will ETH only be a place for whales and crypto OGs until ETH 2.0?