- Rugpull caused sentiment around the network to fall.
- Price of AVAX declined despite the surge in DEX volumes.
The activity on the Avalanche [AVAX] network grew materially over the last few weeks. However, despite the attention the Avalanche network is receiving, things could take a turn for the worse on the network.
Another day, another rugpull
Sender, a memecoin project built on the Avalanche network, is under suspicion of executing a rug pull, marked by the disappearance of its X account utilized for fundraising and a significant 70% drop in its valuation.
A rug pull typically involves the sudden vanishing of project creators after luring in investors, leaving them with a worthless asset and stolen funds. These scams often target newly established projects, exploiting investors’ trust and excitement.
In the case of Sender, approximately 93,000 AVAX, equivalent to around $5.3 million, was raised, yet only 20,000 AVAX was allocated to the liquidity pool upon the token’s launch.
The remaining 73,000 AVAX was transferred to three undisclosed addresses. This discrepancy between raised funds and liquidity allocation caused concerns among stakeholders regarding the project’s transparency and financial integrity, suggesting potential mismanagement and undisclosed funds.
Looking into the details
Furthermore, the disappearance of the project’s original fundraising X account, 4msener, exacerbated existing suspicions and distrust among investors.
With funds seemingly untraceable and the project team failing to provide a clear explanation, apprehensions regarding a possible rug pull escalated. The drastic 70% decline in Sender’s value further highlights the volatility and speculative nature inherent in meme projects.
Incidents like this can erode trust in the Avalanche network among investors and participants. The rug pull tarnishes the reputation of projects built on Avalanche, casting doubt on the platform’s ability to vet and support legitimate ventures.
This could lead to a loss of confidence in Avalanche’s ecosystem as a whole, deterring both investors and developers from engaging with projects on the network.
Moreover, the negative publicity surrounding Sender’s rug pull may deter new projects from launching on Avalanche.
How much are 1,10,100 AVAXs worth today?
A silver lining
Despite these factors, DEX (Decentralized Exchange) volumes on the Avalanche network witnessed an uptick in activity. The surge in activity was driven by Trader Joe. Over the past three days, the Trader Joe protocol has enabled trading volume exceeding $2.35 billion.
Source: X
Even though DEX volumes were on the rise, the price of AVAX tumbled, significantly. In the last 24 hours, the price of AVAX fell by 8.18%. At press time, it was trading at $53.91.
Source: Santiment