Ground Report: Why Are We Still Vulnerable to Rugpulls?

By: Earl Carlo Guevarra | May 28, 2022
Ground Report: Why Are We Still Vulnerable to Rugpulls?

With the latest developments regarding a $200,000+ rugpull by a Filipino-led (and let’s be frank, much-hyped) project called Surf Shark Society (SSS), as well as the numerous painful rugpulls that we had to cover here on P2E News, we believe it’s time for us to see for ourselves why players still keep falling for these schemes, despite an abundance of reputable projects out there.

 

Given the information that is available (through online articles, social media, videos, etc.) to prospective players and retail investors, this shouldn’t be happening, no?

 

Unfortunately, this is not the case.

 

Let’s look at five factors that lead people to invest in these kinds of projects in the P2E gaming space:

 

 

  • Cost of Entry

 

As it turns out, many retail investors don’t have the necessary funds to invest in long-term and high-end projects; based on the fact that these people have salaries ranging from 100-400 USD per month, it could be assumed that they could only muster up to a maximum of 100 USDT from their savings (this is excluding funds from loans and other financing methods).

 

The price tag of many reputable projects out there proves to be a huge factor in driving people to low-cost projects that promise quick returns.

 

 

  • Noise and Influencers on Social Media

 

Let’s be honest, many of us have joined certain projects simply because we have been convinced by influencers (and shillers making noise on social media outlets) to do so.

 

If the project (and its endorsers) are within the space, then good for you. But if not…let’s just hope that we don’t have to face the consequences somewhere down the line.

 

To be frank, these influencers should have done the necessary due diligence before promoting these projects on their respective channels: Even 0.5 percent of 100,000 followers still translates to 500 potential victims.

 

As a matter of fact, many of the influencers listed in the SSS rugpull were actresses, professional esports players, and the like.

 

As a result, players should be more careful now with backing NFT projects that are endorsed by celebrities and influencers, especially if they have zero past knowledge and involvement in the said space.

 

 

  • A Lack (and Distrust) of Reliable Information About P2E Projects

 

For some inexplicable reason, the common player has a distrust of reputable websites in the space that cover actual guides, analyses, and proper coverage of the P2E and NFT space.

 

Things get worse from here.

 

Most P2E players have only been introduced to Twitter through Gleam giveaways and the like; practically speaking, gems and sources of knowledge on Twitter are generally unknown to the normal/first-time P2E player/investor.

 

While there are many crypto influencers and YouTubers who do proper, objective content, it is sad to say that there are also many others who just pump out content for the purposes of shilling and promoting a P2E game (without looking at the project in an objective way).

 

So, no matter how much media entities focus on spreading information, it’s never 100 percent effective.

 

 

  • Too Much Focus on ROI Instead of Reading Fundamentals and Gameplay

 

Many players fail to see the big picture when it comes to games in the P2E and NFT space: Not all games take off, and even those that take off are subject to many factors that affect their overall financial performance.

 

One of the ways rugpull games attract players is through the promise of great ROI and the existence of multiple ROI mechanics. From SpacePort to the CryptoCars Universe, we’ve seen these time and again.

 

Play-to-earn in itself was always supposed to be a bonus (and not the main feature) in itself. As a matter of fact, P2E was designed for players to participate more in the decision-making process of a game (as well as allowing owners to own a part of it).

 

Once we all understand this important concept, we would be less susceptible to the horrors of rugpull projects in the P2E gaming space and beyond.

 

 

  • Sheer Malice

 

Let’s be honest, there are always predators in the play-to-earn space.

 

There are always terrible souls who would tend to prey on other people’s miseries and desperation. There will always be someone who will use the P2E gaming space as a way to take hard-earned money away from the downtrodden.

 

We can’t avoid these people, but we could always prevent them from executing their schemes by knowing the difference between a proper project and a fake one.

 

How Aware Are We?

 

Given these numerous incidents in recent memory, there’s increasing awareness and discernment among stakeholders online.

 

The crew of P2E has asked these questions on social media. Here are some of the most enlightening responses (names and identifiers have been erased for data privacy):

 

(They all only) want easy money.

 

Some others have commented that it’s because of the quick-rich mentality which is prevalent in Filipino culture; someone even said that P2E projects were just a way for people to scam each other and get scammed in return. 

 

So, yes, many people do see the landscape for what it is.

 

Closing Thoughts

 

Despite all the doom and gloom, there’s some hope.

 

For the tech-savvy crowd out there, some of the ways to detect a rugpull project include the existence of autosell, unlimited control, and unlimited selling features within the code, among others.

 

As for those of us who are not familiar with coding (and how the P2E gaming space works), a project that’s “too good to be true” and “too famous without context” are automatic red flags.

 

Of course, the usual DYOR maxim (and checking a project’s providence closely) are still effective tools in preventing people from becoming victims of rugpull incidents.

 

A rugpull can never be stopped, but we could always mitigate or eliminate the damage that it causes through common sense and due diligence.

 

Let’s hope that we don’t have to report rugpull incidents this 2022 here at P2E News!

 

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