What Is a “Rug Pull” in Cryptocurrency and How Does Vesting Help Prevent It?

A "rug pull" is a malicious maneuver in the crypto space where a development team abruptly abandons a project and cashes out all the funds raised from investors, typically causing the token's value to plummet to zero. Vesting helps prevent this by restricting the team's access to their own tokens and, crucially, often by placing the raised funds (the treasury) under a smart contract with time-locked release or multi-signature control.

A long vesting schedule for the team's tokens ensures they have a financial incentive to stay and build the project over time.