Key Takeaways
- Crypto honeypots are ways scammers will continue to exploit new traders and investors in the crypto space.
- Knowing what crypto honeypots are as traders or investors will help you avoid common traps used by scammers when trading on DEX platforms.
- Using token sniffers and thorough research will protect you from falling prey to crypto honeypots.
The crypto market continues to bask in the euphoria of the crypto bull market, with Bitcoin rallying to new highs, memecoins making many millionaires, and altcoins aiming to hit new highs in the coming months. Many crypto investors and retailers must be wary of crypto honeypots or scams, especially on decentralized exchanges such as Pancakeswap, Uniswap, Raydium, etc.
While the crypto market grows, many scam projects or individuals with deceptive intentions are trying to siphon traders of their hard-earned money with projects or links promising high returns or exploit wallets in this present market uptrend.
Projects and links may look legit, but in a way, they are crypto honeypots, as traders and investors are locked out from accessing funds when deposits or crypto assets are purchased on decentralized platforms.
This article discusses crypto honeypots and how users can stay safe in the current market uptrend and not give money back to crypto scammers in the form of crypto honeypots.
Crypto Honeypot Scam And How It Works
Crypto honeypots are schemes used by scammers to pretend to be legit tokens or projects with innovative ideas or new trends. Many crypto investors and traders are jumping on these projects or tokens, but withdrawals on these projects or tokens are revoked to scam people of their funds after purchase.
They often operate on decentralized exchanges (DEX), which allow them to list new tokens without much restriction. Scammers usually launch a token, given its initial value, to generate interest, hype it on social media platforms, and, when it has generated enough volume, the creator sells all the tokens, leaving others stranded.
2 Key Signs It Is Crypto Honeypot
Scammers who want to deceive many users look for different means to trick others. When entering a new listing, we will discuss some red flag signs that it could be a crypto honeypot for degen traders on decentralized exchanges.
- One-way trading: Always watch out for transactions carried out on the token. If you notice the transaction is a buy-only transaction without sales, then this is a honeypot, as the scammer has full control of the token and can rug pull at any time, draining the liquidity.
- Low transparency and suspicious smart contract: crypto honeypots, especially memecoins, are very pronounced as they rely on social media for hype and fake links to the token address with no real team or genuine information about the memecoin; there is a 99% chance it is a crypto honeypot or smart contract are suspicious when read with restrictions on selling the token, then it is a crypto honeypot.
Protecting Yourself From Honeypot Scams
Protecting yourself from crypto honeypots requires doing proper research on the project you wish to invest in and inspecting addresses and smart contracts to be sure they are real and legitimate. Scammers use different means to deceive crypto traders and investors to ensure they are always up to date with the trends happening in the crypto space. You can use a token sniffer to check real token addresses.
