Are Hyped Projects Potential Rug Pulls?
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.
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.
This deep-dive was inspired by the recent slew of “are you this old anon?” posts.
These posts reference projects that raised millions of dollars, but ultimately went nowhere.
— KEMOSABE (@KEMOS4BE)
Feb 18, 2023
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.
Of the 200+, we chose 5 to illustrate what happens to 99% of “hyped mints.”
These 5 represent projects from each NFT sector: Art, Brand, Metaverse, Gaming, & DeFi.
They represent the most severe cases as these projects siphoned over $10,000,000 from the ecosystem.
— KEMOSABE (@KEMOS4BE)
Feb 18, 2023
The message delivered
We need a paradigm shift in how projects are held accountable — hyped mints must be held in escrow with fund delivery only completed upon community-approved milestones.
We cannot continue to give millions of dollars to crypto scammers if we want this industry to progress.
— KEMOSABE (@KEMOS4BE)
Feb 18, 2023
Coinbase Launches L2 on Ethereum Called BASE
Coinbase gave us literal blue balls 🔵 with this Twitter post.
🔵 2.23.23
— Coinbase (@coinbase)
Feb 22, 2023
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.
@RyanSAdamstwitter.com/chrisblec/stat…
— Sebastian.pls (@slendermusician)
Feb 23, 2023
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
- Blur overtook OpenSea with its NFT rewards model, driving Over $500M in Ethereum NFT trades.
- Curio Research levels up with $2.9m in seed funding for on-chain gaming labs. Bain Capital Crypto and TCG Crypto among Consortium of Investors.
- Metacade partners with exchange, MEXC Global, to increase its reach to investors around the world.
- Rumour has it - Rockstar's next Grand Theft Auto (GTA 6) may have cryptocurrency.
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