Rug Pulls in the IoT and DePIN Ecosystem: Patterns, Red Flags, and Risk Mitigation

Rug pulls remain one of the most pervasive and damaging forms of fraud in blockchain-based ecosystems. While a growing body of research has examined these schemes in conventional decentralized finance settings, far less attention has been paid to the distinctive risks that arise when token incentives are combined with physical infrastructure. Decentralized Physical Infrastructure Networks (DePIN) and related Internet of Things (IoT) projects often require participants to invest in hardware while relying on token rewards, creating hybrid risk surfaces that differ from purely digital token environments. This paper presents a structured, literature-based analysis of rug pulls in the IoT and DePIN ecosystem. Drawing on existing studies of smart-contract vulnerabilities, liquidity manipulation, serial scammer behavior, and detection methods, we develop a taxonomy of rug-pull patterns that incorporates both classic mechanisms and those linked to hardware sales, controllable emissions, and operational abandonment. We consolidate practical red flags across contract, liquidity, hardware-incentive, and operational dimensions, and introduce simple quantitative indicators to support more consistent risk assessment. Building on these elements, we propose a multi-layered mitigation framework organized around prevention, monitoring, and response. The contribution is deliberately conceptual. Rather than introducing new datasets or detection models, the paper synthesizes scattered insights into a coherent analytical structure tailored to the hybrid nature of IoT and DePIN projects. In doing so, it highlights critical gaps in current research and offers a practical foundation for participants, evaluators, and future empirical studies seeking to reduce exposure to exit scams at the intersection of blockchain incentives and physical infrastructure.