How To Avoid Rugpulls: Lessons From Cosmos (ATOM) And Market Sentiment
How to avoid kickpulls: Lessons of Cosmos (atom) and Market Emotions
The world of cryptocurrency is constantly evolving and new projects are formed every day. One of the most significant risks of investing in cryptocurrencies is kickpulling, a phenomenon where the project token is steal or disappeared, for no obvious reason. In this article, we examine how to avoid kinks and, based on two remarkable examples, we can gain valuable insight into market emotions: cosmos (atom) and its recent struggles.
Rugpulls: What are these?
Rugpull is a type of Ponzi system in which the project team or investors blame funds to cover losses instead of actually value to users. This is millions, if it can not lead to billions of dollars, a dollar cryptocurrency.
Cosmos (atom): Lesson in market emotions
In 2019, a decentralized network of independent, open source blockchain platforms, which deleted more than $ 2 billion, suffered a decentralized network of independent, open source blockchain platforms. The native token of the project, the atom, was one of the most popular and widely used coins in the market.
In order to understand why this happened, the market emotions surrounding the cosmos should be analyzed at its peak. At the height of the hype, the atomic price rose from about $ 15 to $ 90 and attracted millions of investors. The native token of the project was aggressively replaced by whales and retail investors, and prices often came with millions.
However, under the surface, the infrastructure underlying Cosmos deteriorated rapidly. The team lost control of their treasury, leading to a lack of liquidity for investors and users. In addition, there were concerns about the project scalability, usability and overall viability.
Why did Cosmos (atom) experience such a severe kink?
There are many reasons why the Cosmos market took an unexpected turn:
- Tokenomics: The token focused on utility rather than liquidity, which resulted in an inflated price.
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- Dimensioning Problems: Cosmos network has struggled on the scale, leading to increased transaction fees and reduced usability for users.
Lessons of Cosmos (atom)
Although the cosmos story is a cautious tale, it also provides valuable lessons:
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Investment wise: Be careful if investing in cryptocurrencies with high growth rates or unconfirmed tokenomics.
- Liquidity Issues: Make sure you have sufficient liquidity to take advantage of market fluctuations.
- Governance is essential:
Strong management structures are essential to maintain control and transparency.
Market Emotions: Caution Mead
At the peak of market emotions around Cosmos (atom), it is increasingly reminiscent of investing in cryptocurrencies:
- High expectations: The hype around the atom led to unrealistic price targets, which were eventually disproportionately exploded.
- Excessive marketing:
Whales and retail investors have relied too much on marketing campaigns and social media, ignoring basic analysis.
- Lack of diversification: The market has become increasingly polarized and many investors are locked into the token or project without taking into account the broader market context.
Avoid Rugpulls: Cryptocurrency Guide
Follow these proven exercises to avoid kickpulls:
- Do thorough research: Before investing, understand the history, team and technology of the project.
- Focus on basic analysis: Value the project based on the funds underlying the project instead of relying on Hype or marketing campaigns.
- Diversify your portfolio: Support your investments to multiple projects and tokens to minimize risk.
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