Be careful when dealing in NFTs; Here’s What It Means and How You Find It

The first major “Rag Pull” of the year was recorded on Tuesday, as the value of 8,888 NFTs collected under the Frosties project dropped to almost zero overnight. The project, which earned about $1.3 million from investors through its NFTs, is part of a growing number of crypto crimes reported around the world over the past year.

What is Rag Pull and what happened to Frosties?

In cryptography, a veg bridge occurs when the creators of a project suddenly stop supporting it. As a result, the price of NFTs drops to zero, causing huge losses to investors. In this specific case, the makers of Frosties were publishing details of their activities via social media channels and other platforms, driving the price upward.

On January 10, users suddenly realized that the website, Discord channel and its Twitter account had disappeared, and the creators had withdrawn the funds that investors had transferred to their crypto wallets. At the time of writing, there were only $4,000 worth of Ether (ETH) tokens left in the wallet, and nearly $1.1 million worth of ETH was withdrawn in two days, to the dismay of unsuspecting investors.

Was this the first case?

The Frosties event is the first rug of 2022, but it certainly isn’t the first. In October 2021, a project named Iconix made on the Solana platform disappeared overnight. In that case, the artist behind Iconix forfeited 1000 SOLs (Solana Tokens), which would have now cost around $150,000. The artist promised to deliver 8,000 3-D artworks, but ended up distributing random emoji instead. They pre-sale 0.5 SOL for 2000 of these and instead made away with the money.

Last March, another artist known as “Netherconfirm” had a similar scandal when he converted NFT-linked photos from computer-generated art into literal pictures of carpets. There were other examples where there were platforms like OpenSea (Jahan). NFTs were sold) have been able to limit losses from such scams, but experts say it is usually impossible to identify to an ordinary person.

How to spot Rag bridge?

The founding of NFT projects such as Cryptopunks and Bored Ape Yacht Club (BAYC), sees the continued development of the project. For example, BAYC partnered with Adidas in December to launch the footwear brand’s NFT project. Such steps show seriousness. Experts also suggest tracking down the real creators behind a project and finding out their relevance in the community. That said, there is no easy way for a layman to track whether a project is likely to pull the rug out. The rule of thumb is to look at the feasibility of a project rather than get bogged down by the social media craze.