Rug Pulled? Essence Finance Stablecoin Crashes 92%

Essence Finance, a project in the Scroll ecosystem, has raised suspicions of executing rug pull after its stablecoin, CHI, experienced a phenomenal price clash of over 92% in the last 24 hours. 

Launched in 2023, Essence Finance is a decentralized finance (DeFi) protocol within the Scroll ecosystem that aims to realize the vision of a truly decentralized but fully collateralized stablecoin that can be sustainably maintained. 

Stablecoin Slumps Over 90% 

According to data from GeckoTerminal, the protocol’s stablecoin, CHI, has plummeted by more than 98% in the last 24 hours at press time, dropping to $0.01336. Additionally, more than $20 million in collateral has allegedly been withdrawn from the project, fueling suspicions of a potential rug pull. 

It is worth mentioning that the project’s last communication on its X handle was on September 11, leaving investors questioning its reliability. The project was audited by FEI Protocol V2, which should have attested to its security and stability. However, the recent rapid asset drain and lack of updates have sparked significant concerns regarding Essence Finance’s credibility and the safety of DeFi investments.

Rug Pull: A Tool for Bad Players

Over the years, rug pulls have become a tool for players aiming to exploit unsuspecting investors and rid them of their hard-earned money.

A rug pull occurs when developers of a crypto project withdraw users’ funds from its liquidity pool and subsequently abandon the project, leaving the token price to crash to zero. In most cases, the bad players create an exit backdoor through which stolen funds can be easily and quickly moved. Many of such projects are often relatively new.

Such malicious projects grow their user base by promoting the project through social media platforms like X, Facebook, and Telegram. As such, investors are always advised to conduct thorough research before investing in any project to ensure the safety of their funds. They should also be wary of any crypto project that lacks clarity on how it works because a lack of transparency in most cases leads to significant loss. 

Earlier this month, CoinTab reported detailed how a Solana-based decentralized exchange IBX executed a $24 million rug pull through the sale of the Artic (ARTIC) memecoin.