Honeypot Scams Podcast

Beware of Honeypot Scams in Cryptocurrency

Honeypot scams are tokens specifically designed to trap buyers by preventing them from selling. Scammers lure victims into purchasing these tokens, then use the token’s contract to block sales, ultimately leading to a “rug pull.”

Understanding Honeypot Scams

Scam Tactics:

  • Purchase Trap: Victims are tricked into buying a token.
  • Sale Block: The token’s contract prevents the victim from selling their tokens.
  • Rug Pull: Scammers remove liquidity from the pool, making the token worthless and unsellable, and steal the crypto in the liquidity pool.

Methods Scammers Use to Prevent Token Sales

  1. Blacklist Function: Prevents specific addresses from trading.
  2. Whitelist Function: Restricts trading to certain addresses only.
  3. Anti-Whale Function: Limits the number of tokens that can be transacted per wallet or overall.
  4. Cooldown Function: Implements a delay before tokens can be sold after purchase.
  5. Suspend Trading Function: Stops all buying and selling of the token.
  6. High Sell Tax: Imposes a high tax on sales, often above 10%, with anything over 50% making the token effectively untradable.
  7. Modifiable Tax: Allows the contract owner to change the transaction tax, potentially increasing it to a prohibitive level.
  8. Change Balance Function: Enables an address to alter the balance of tokens at other addresses.
  9. Proxy Contract: Allows the contract owner to modify token functions, affecting its price.
  10. Hidden Owner: Even if ownership is renounced, the developer can still manipulate the contract.

Protecting Yourself from Honeypot Scams

Contract Verification:

  • GoPlus Labs: Run the contract address through GoPlus Labs for a security audit.
  • TokenSniffer: Use TokenSniffer to check for known scam patterns in the contract.

Community and Market Checks:

  • Multiple Address Sales: Verify if multiple addresses can sell the token using platforms like DexScreener and Defined.fi.
  • Social Media Insights: Check Twitter and other social media platforms to see what holders are saying about the token.

Conduct Thorough Research:

  • Read Reviews and Reports: Look for reviews and security reports on the token and its contract.
  • Community Feedback: Engage with the crypto community to gather more insights and warnings about potential scams.

Conclusion

Honeypot scams pose a significant risk in the cryptocurrency market. By understanding the various methods scammers use and following the steps outlined above, you can protect yourself from falling victim to these scams. Always conduct thorough research and use reliable tools to verify the legitimacy of any token before investing. Stay informed, stay vigilant, and safeguard your crypto assets.