A rug pull is a crypto scam where developers create a token, attract investment, then drain the liquidity pool and disappear — 'pulling the rug' from under investors. Ethereum's open smart contract ecosystem makes it easy to deploy tokens. Red flags include anonymous teams, no audit, locked liquidity for suspiciously short periods, and contracts with hidden mint or withdraw functions. Billions have been lost to Ethereum rug pulls annually.
How does impermanent loss work on Ethereum DeFi?
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Impermanent loss occurs when you provide liquidity to an AMM (like Uniswap) and the price ratio of your paired tokens changes. If ETH doubles against USDC, your LP position is worth less than if you had simply held both tokens. The 'loss' is impermanent only if prices return to the original ratio; if they don't, the loss becomes permanent when you withdraw. Trading fees earned can offset impermanent loss, but not always.
What happened to people who bought Ethereum at all-time high?
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Ethereum hit its ATH of ~$4,900 in November 2021. By June 2022, it had fallen to ~$880 — an 82% decline. Investors who bought at peak and held through the bear market recovered significantly when ETH returned above $3,000 in 2024, but many panic-sold at the bottom. The pattern repeated the 2018 cycle where ETH fell 95% from ATH before eventually reaching new highs years later.
