Breakdown of Rug Pulls on PumpSwap (Educational Post)
Running a rug pull is a method used by scammers to steal money from their victims according to the US SEC (Securities and Exchange Commission), and it carries criminal consequences, as seen in cases like Avraham Eisenberg with Mango Markets in 2022.
In this article we’ll walk through the process rug pullers use to pull off this scam in the memecoin market, specifically on PumpSwap.
Read this post for what it is: a breakdown of the rug pull mechanism on Pump Swap that investors can use as a guide to steer clear of these kinds of tokens.
If you don’t want to lose all your funds to a memecoin that looks like fertile ground, keep reading. Below we break down each step that leads up to the liquidity being pulled on Pump Swap.
“To avoid rug pulls, thorough research, security audits, community involvement, and awareness of warning signs are critical.” by Coinbase
How a Rug Pull Is Executed on Pump Swap
Here’s the step-by-step. Keep in mind PumpSwap is a Solana protocol just like Raydium, so while the mechanism is similar to doing a rug pull on Raydium, this walkthrough has its own unique twists:
1) Creating the token
The logical place to start is creating the token and listing it on PumpSwap. You don’t need to push it through Pump Fun first; you just create a regular token on Solana and then the devs head to Pump Fun to create the liquidity pool.
Here’s an example of a tool offered by Smithii that lets you create tokens on Solana with zero coding knowledge. That said, we recommend using it to build legit projects, not rug pulls that hurt the ecosystem.
And here’s a critical step rugpullers rely on: picking data that fits a token aligned with what’s currently trending. A common move is to check the pump fun homepage.
Once there, they spot the most attractive memecoins of the day and either clone them or make near-identical versions.
From there, they pull these parameters from the chosen token:
- The name
- The description
- The ticker (Symbol)
- The image
Then decimals are set to 6 and the supply is typically 10 Billion.
Now, as for the authority revocation parameters (Freeze, mint, and update): all of them get revoked.
Why? Simple: nobody buys a honey pot (freeze authority not revoked) or an inflationary token (mint authority not revoked). Every sniper bot, meaning the ones that are going to be used as exit liquidity, steers clear of tokens that haven’t had their authorities revoked.
Keep in mind these kinds of tokens also add social links. Sniping bots check whether a token on PumpSwap has these links or not to “verify” if it’s legit.
Now they copy the freshly created Token Address and open a tab on DexScreener
This is where they copy their token address from phantom, which they’ll need to view the token on DexScreener and later execute the Rug Pull.
Then they copy the SPL Token Address:
They copy it and open a window to view the token on PumpSwap:
https://swap.pump.fun/?input=So11111111111111111111111111111111111111112&output=SPL-TOKEN-ADDRESSAnd they leave it open in a new tab until it’s time to execute the rug.
Once they’ve got all this set up, they move on to the next step.
2) They Launch the liquidity pool + Bundle on Pump Swap
Once they’ve created the token and it’s ready on the wallet, they move on to executing a bundle.
What’s the point of a Bundle? Basically, it makes the chart look like this:
And what’s special about that? Simple. The idea is that bots fire off a buy order when the token gives them a certain percentage of profit. If you bundle at launch on Pump Swap with the token, it gets much harder for bots to hit that percentage, so they stay locked inside the curve longer.
The SOL deposited for the bundle has to be high enough to avoid getting hit by a quick dump.
With that said, they go ahead and launch the bundle using a bundle bot for Pumpswap.
Learn how to use a bundle bot on Pump Swap the legit way
How Much Liquidity Gets Added to the token on Pump Swap
The more liquidity you add, the more bots will buy the token, since the project looks more legit. Below is a table showing the values that count as very low or high liquidity for a token:
| Category | SOL |
|---|---|
| Very low liquidity | 1 – 15 SOL |
| Low liquidity | 16 – 50 SOL |
| Moderate liquidity | 50 – 200 SOL |
| High liquidity | 200 – 800 SOL |
| Very high liquidity | More than 800 SOL |
When you hit “create”, you need to save the ID of the liquidity pool for the token. That’s how rug pullers make sure they can keep going with their play.
3) Use a volume bot (OPTIONAL)
To give the rug pull on Pump Swap a turbo boost, a common strategy is to use a volume bot to increase the token’s visibility. That said, the volume bot can also be used for legitimate exposure plays in other contexts.
Plenty of devs use this to push the token’s price or trading volume up and pull in fresh snipers. This tool should be used with a clear purpose in mind.
If you push the token’s volume up, plenty of bots will notice the liquidity pool and decide to buy in. On top of that, the volume bot is also commonly used to hold a certain price steady and keep the chart trending upward.
This is how you make the chart look full of activity. If you want a deeper dive into how to use this kind of bot for legitimate purposes, check out the full guide to using a Volume bot on Pump Swap.
4) Remove the liquidity on Pump Swap
Once you hit “Create Liquidity Pool”, the dev will need to head to the PumpSwap tab mentioned earlier and check the chart.
On the other hand, the rug puller has to instantly fire up a Bundler Seller tool and stay sharp for the right moment to pull the rug.
Keep in mind that these tools were originally built to promote tokens in a reasonable and ethical way across different platforms, including Pump Swap.
Since the dev is sitting on a huge stack of tokens from the earlier bundle buy, they can dump everything in a single move at any time. When they do, they’ll cash in on every buy made up to that point and the chart will end up looking like this:
At its core, pulling a Rug Pull on Pump Swap is about looking convincing as fast as possible and nailing the timing to remove the liquidity.
Pulling a rug pull on Pumpswap is illegal and deeply unethical
At first glance, it looks like a simple, potentially profitable play. But nothing could be further from the truth, since making money off rug pulls is completely unpredictable and flat-out illegal. Sure, there will be moments where you book a win, but most of the time it goes the other way.
“Market manipulation, such as pump and dump schemes, is just as destructive to crypto markets as it is to traditional ones.” By Chainalysis
On top of the dev rolling the dice for the occasional payout, they’re leaning on an illegal practice that can land them in serious legal trouble. That’s why it’s far more rewarding to run a legit token or meme coin and pull in income legally and without headaches.
Conclusion
This isn’t personal advice. The truth is, pulling off a meme coin on Pump Swap successfully can net you 20x more. It’s not a get-rich path by any means. If you want to start on the right foot, we recommend reading the guide on creating a meme coin on PumpSwap.
