Ethereum’s first L-2 solution Arbitrium has come under the limelight after its newly launched DEX ArbiSwap is suspected to have rug-pulled users by removing over $100,000 from the platform’s liquidity pools.
Over the last 24 hours, ARBI tokens plummeted from $1.5 to worth a fraction of a cent at press time. On-chain data also shed light on the rogue developer’s action.
It showed around 1 billion fake tokens were minted, and then swapped for USD Coin [USDC] and then for roughly 69 ether [ETH].
According to reports, the fact that the liquidity pools were mostly under the control of developers might have made it easy to shut shop and escape.
For those new, Liquidity pools refer to the token pairs held by smart contracts on decentralized exchanges, with developers initially seeding both sides of a token pair.
Only $4 million was available on ArbiSwap in the early hours of Thursday morning in Europe, according to blockchain data from DEXTools. After the service’s February launch, its total locked value swiftly increased to $4.4 million [TVL].
Users’ immediate interest in ArbiSwap was probably sparked by the DEX, which touted offering holders of ARBI 100% of all revenue made on its platform in exchange for their ARBI holdings.
The above action is a classic rug pull: developers set up a functioning decentralized finance application, use social media to promote it, then create a token and list it on a decentralized exchange [DEX].
The developers close business, reduce liquidity, and vanish after investors buy the tokens in the hope of a profitable investment.
Another Ethereum NFT Project’s Action Sparks Rug Pull Claims
After earning more than $5 million in ETH in last year’s mint, Friendsies, an Ethereum NFT project by the venerable art team FriendsWithYou, has made an important announcement.
The team behind the Ethereum project announced recently that it would “halt” all future ambitions for the project before reportedly removing their Twitter account, which sparked claims of a “rug pull.”
Currently, some community members are putting out a plan to take over and carry on with the project.
The now-deleted tweet thread stated, “As the project founders, we have decided that it would be better to put a halt on [Friendsies] and all future digital items for the time being.
