How to avoid RugPulls: Cosmos Lessons (Atom) and Market Feeling
The cryptocurrency world is constantly evolving, with new projects emerging every day. One of the most significant risks associated with investment in cryptocurrencies is RugPulling, a phenomenon in which a project token is stolen or missing without any apparent reason. In this article, we will explore how to avoid RugPulps and obtain valuable information about the market feeling of two remarkable examples: Cosmos (Atom) and their recent struggles.
Rugpulls: What are they?
A RugPULL is a type of Ponzi scheme, where a project team or investors are funds in an attempt to cover up losses rather than actually providing value to users. This can lead to millions, if not billions, of dollars in cryptocurrency.
Cosmos (Atom): a lesson in the feeling of the market
In 2019, Cosmos, a decentralized network of independent blockchain platforms and open source, suffered a devastating rock that ended with more than $ 2 billion in value. The native project token, Atom, was one of the most popular and widely used currencies in the market.
To understand why this happened, we need to analyze the feeling of the market around the cosmos at its height. At the height of Hype, the price of Atom fired from $ 15 to over $ 90, attracting millions of investors. The project’s native token was being aggressively negotiated by whales and retail investors, with prices often reaching multimilons.
However, under the surface, the underlying infrastructure of cosmos was rapidly deteriorating. The team had lost control of their treasure, leading to lack of liquidity to investors and users. In addition, there was concerns about scalability, usability and general viability of the project.
Why did the cosmos (Atom) experience such a serious rugpula?
There are several reasons why Cosmos’s Market has taken an unexpected curve:
- Tokenomics: The token was released with a focus on utility rather than liquidity, leading to an inflated price.
- Lack of governance: The lack of responsibility and transparency of the team allowed them to mislead their funds and address losses.
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Cosmos Lessons (Atom)
Although the history of the cosmos is a warning tale, it also provides valuable lessons:
- Invest wisely: Be cautious when investing in cryptocurrencies with high growth rates or unproven tokenomics.
- Liquidity Materials: Make sure you have enough liquidity to take advantage of market fluctuations.
- Governance is crucial: strong governance structures are essential to maintain control and transparency.
Market feeling: a warning tale
Market sentiment around the cosmos (Atom) during your peak is a stark reminder of the risks associated with investment in cryptocurrencies:
- High expectations: Hype around the atom led to unrealistic price goals, which were eventually disproportionate.
- Overseas Marketing Confidence: Whales and retail investors have become excessively dependent on marketing campaigns and social media influencers, ignoring fundamental analysis.
- Lack of diversification: The market has become increasingly polarized, with many investors trapped in token or specific projects without considering the broader context in the market.
Avoiding RugPulls: A Cryptocurrency Guide
To avoid RugPulls, follow these best practices:
- Perform complete research: Understand the history, team and project technology before investing.
- Find out of the fundamental analysis: Evaluate a project based on its underlying foundations rather than relying on hype or marketing campaigns.
- Diversify your portfolio: Spread your investments in multiple projects and tokens to minimize risk.
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