Centralization Risk
Centralization risks are vulnerabilities that can be exploited both by malicious developers of a project as well as outside attackers. They can be taken advantage of in rug pulls, infinite minting exploits, and other types of attacks.
In token minting contract exploits, if someone gains access to the private key of the contract, they can mint as many new tokens and send them anywhere they’d like.
With rug pulls, project founders can sell all of the tokens they hold — draining the liquidity from a decentralized exchange (DEX).
Other rug pulls involve founders stealing tokens from a presale lockup contract. Rug pulls thrive on decentralized exchanges because they allow free listings of new tokens with no requirement of a smart contract audit.
Smart contract audits are a necessary first step in identifying centralization risk.