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Spot the rug.
Four token setups you'll actually meet in the wild. For each one, decide: can the people behind it take your money? Then see why — and what covenants change about the answer.
The deployer kept the mint keys
A new token launches. Supply: 10 million. But the deployer’s own wallet still holds the authority to mint more — nothing on chain stops them.
They can print unlimited new tokens and sell into every buyer. Your share of the supply is whatever they decide it is.
A covenant token bakes the supply rule into the coins themselves — the mint either doesn’t exist after launch or is chain-limited. On Kaspa, KCC-20 supply rules are enforced by consensus, not by trust.
Liquidity locked in a covenant AMM
The trading pool’s KAS and tokens sit inside a covenant that only allows swaps at the pool’s price formula. No withdraw-everything entry exists in the contract.
Nobody — not even the team — can pull the liquidity, because the covenant has no code path for it. A withdrawal that breaks the formula simply is not a transaction.
This is what "rug-proof by construction" means. You can verify it yourself: read the contract’s entries and check no drain path exists.
The admin can pause trading
The token trades freely — but the contract has an admin entry that can freeze all transfers "for emergencies", controlled by one wallet.
The classic honeypot shape: you can buy, then the switch flips and only the admin can sell. Even a well-meaning pause key is a single point of failure that can be sold, stolen or subpoenaed.
Ask of every contract: what can the privileged key do to ME? If the answer is "stop me from selling", the rug isn’t hypothetical — it’s a button.
Escrow where the contract pays out
A buy order locks KAS in a covenant. Anyone who delivers the right tokens gets paid by the contract itself — the covenant checks the delivery and releases the KAS. No operator in the loop.
There’s no middleman to run away with the funds — the payout condition is the code, and the whole network checks it on every spend.
This is the pattern behind Kaspa’s L1 order books. The honest caveat: the code enforces exactly what’s written — so what’s written still has to be right.
The one-sentence takeaway: a promise kept by a person can be broken; a promise compiled into the coins cannot. That's the entire point of covenants.
Honesty note: these are generic patterns, not descriptions of specific projects. And "can't rug you" is about one specific theft — it never means a token is a good buy.