How do rug pulls happen in DeFi projects?

[chainsniff]

Advanced scams often include:

Admin keys or minting privileges that allow the developer to drain liquidity.

Phantom liquidity: liquidity appears on-chain but is unusable or owned by the dev.

Hidden code exploits in smart contracts.

Defense:

Audit contracts using third-party services (CertiK, Hacken).

Check token ownership and renounce privileges where possible.

Review tokenomics for red flags like extreme liquidity lock differences or unusually high developer allocations.