What Is a “Rug Pull” and How Does It Relate to Contract Immutability?
A "rug pull" is a malicious maneuver where developers suddenly drain the liquidity from a decentralized exchange (DEX) or lending pool, leaving investors with worthless tokens. It relates to immutability because if the contract code contains a hidden function allowing the developers to unilaterally withdraw funds, the lack of immutability (or the presence of an unauthorized 'owner' function) is the exploit vector, making the project non-trustless.
Glossar
Decentralized Exchange
Architecture ⎊ A decentralized exchange (DEX) fundamentally diverges from traditional order book exchanges through its reliance on smart contracts and blockchain technology to facilitate peer-to-peer trading, eliminating the need for a central intermediary.
Immutability
Provenance ⎊ Immutability within cryptocurrency, options, and derivatives signifies the unalterable record of transaction history and contract terms, crucial for establishing trust and mitigating counterparty risk.
Lack of Immutability
Mutability Risk ⎊ ⎊ A deficiency in immutability within cryptocurrency, options, and derivative systems introduces operational vulnerabilities and systemic risk, particularly concerning transaction finality and contract execution.