How To Avoid Rugpulls: Lessons From Cosmos (ATOM) And Market Sentiment

How to avoid rugpulls: Lessons from space (atom) and market moods

The world of cryptocurrency is constantly developing, and new projects appear every day. One of the most important risks associated with investing in cryptocurrencies is rugpulling, the phenomenon in which the project token is stolen or disappears for no visible reason. In this article, we will examine how to avoid rugpulls and get a valuable insight into market moods with two significant examples: Cosmos (atom) and its last fights.

Rugpulls: What are they?

Rugpull is a type of Ponzi program in which the project team or investors incorrectly equalize funds, trying to hide the losses, and not actually provide users with value. This can lead to theft of millions, if not billions, cryptocurrencies with a value of dollars.

Cosmos (atom): Lesson of market moods

In 2019, Cosmos, a decentralized network of independent blockchain platforms with open open source, suffered a destructive rugpull, which erased the value of over $ 2 billion. The family project token, atom, was one of the most popular and most used coins on the market.

To understand why this happened, we must analyze the market moods surrounding the cosmos at the top. At the peak of noise, the price of the atom increased from around USD 15 to over 90 USD, attracting millions of investors. The family token of the project was aggressively trading through both whales and retail investors, and prices often reached many millions.

However, under the surface, the cosmos infrastructure quickly deteriorated. The team lost control over the treasure, which led to a lack of liquidity for investors and users. In addition, there were concerns regarding the scalability of project, utility and general life.

Why did Cosmos (atom) experience such a heavy rugpull?

There are several reasons why the Cosmos market accepted the unexpected phrase:

• Tokenomics: The token was launched with an emphasis on usability, not liquidity, leading to an overstated price.

• Lack of management: The lack of responsibility and transparency of the team allowed them to incorrectly release funds and hide the losses.

• Problems with scalability: The Cosmos network fought for scaling, which leads to increased transaction fees and reducing usability for users.

Lessons with Cosmos (atom)

Although the history of Cosmos is a warning story, it also provides valuable lessons:

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• liquidity matters: Make sure you have enough fluidity to take advantage of market fluctuations.

• Management is crucial: Strong management structures are necessary to maintain control and transparency.

Market sentiment: Warning story

The market sentiment surrounding the cosmos (atom) during the summit is a clear reminder of the risk associated with investing in cryptocurrencies:

• High expectations: Hype surrounding the atom led to unrealistic price goals, which were eventually blown.

• Excessive rely on marketing: Whales and retail investors have become too dependent on marketing campaigns and influential social media, ignoring a fundamental analysis.

• Lack of diversification: The market has become more and more polarized, and many investors have been enclosed in a specific token or project without taking into account a wider market context.

Avoiding rugpulls: cryptocurrency guide

To avoid rugpulls, follow the best practices:

• Do thorough research:

  

  Understanding history, team and technology understand the project.

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