How To Recognize Rug Pull And Scam Token 🕵️‍♂️

There are several analyzes that could help you understand that a token is a scam. In this article we will look at some red flags.
Here you can find some Rug Pulls and Exploit codes to recognize them: Exploits & Rug Codes (Examples)
Another online tool that can help us determine if a token could be legit or not is TokenSniffer (you simply have to enter the contract of the token you are interested in. You can find it on CoinMarketCap, Coingeko or on the official website of the project). In general, remember that tokens with few transactions and very low volumes are scams. You can check it on the blockchain explorer where the token was born!

🟠 FALSE SECURITY

Remember that having a Twitter page with lots of followers and likes does not make a token "legit". They could be bought followers (bot). Same goes for Discord and Telegram. The first red flag are pages with 100,000 followers (example) but few interactions in tweets.

🟠 MARKET CAP

A parameter that is often given great importance is that of the market cap. The market cap is a very important metric for cryptocurrencies to try to predict their future trend. It represents the product between supply and price of the single token. The lower the market cap, the greater the growth potential. However, it can be easily manipulated, if a token is not listed on large exchanges but only on small ones (with little liquidity) or dex. Why? If I own 10 billion tokens but only deposit 10 million tokens on Uniswap and give it $1 worth, it will clearly result in a fictional market cap of $10 billion! How do liquidity pools work? If you deposit 10 million tokens (X) with 10 million USDT (Y), each of your tokens will be worth $1 (liquidity pools are 50% -X and 50% -Y). The real market cap is 10 million dollars, instead thanks to hidden (or not blocked) supply it would be 10 billion!

🟠 AUDIT AND TIMELOCK

One of the most important features of a platform and a token are the audits that verify errors, bugs and vulnerabilities of smart contracts, potential front running, etc. Among the most important checks is the timelock of a certain number of hours (usually 72). Basically, if the owner of the smart contract wants to change something, before these changes become active, a number of hours must pass. The timelock puts these changes in a queued transaction and they must pass at least 72 hours before they are executed. It is one of the major protections for Rug Pulls.

🟠 HIDDEN CONTRACT

A classic example of a hidden contract is this: 0xaeea926528c8fcfcb9b5214b8226bba7ba1a4d71
Note the differences with this: 0xCa3G508B8e4Dd382eE878B314789373D80A5190A
"0x" is the suffix of all Ethereum tokens and those compatible with it (EVM). In the first contract you see a long series of letters without any number (which only reaches the seventh letter) that prevent you from reading the contract and the owner of the same.
It is therefore impossible to see the tokens owned by the dev team.

🟠 MODIFIELD CONTRACT

There are also other variants that affect contracts: modified ones (for example if you look at this 0x02f92a9c381bdea49bde29a8277666c73e60c88d and try to read the contract I will get this 0x00000000000000000000000000000000000000).

🟠 OWNERSHIP NOT RENOUNCED

It concerns decentralization and renunciation of ownership of the same. The token becomes the property of the market itself. The team that does not give up the contract could change fees, mint new tokens, stop trading, etc

🟠 TOP HOLDERS

In addition to the quantity owned by the dev team, it is also important to check the top holders (which can be verified on Etherscan or on the explorer of the blockchain you are interested in, by writing the name or contract of the token by going to holders).
Amounts above 5% are a big red flag. Having 10% supply of a token with a market cap of $ 300 million means that someone owns $ 30 million of that token! The dump is a big risk.

🟠 LIQUIDITY NOT BLOCKED

If liquidity (LP) is not blocked there is a high risk of Rug Pulls (removal of all liquidity from a dex). Liquidity could also be hidden and divided into multiple wallets. From Poocoin for example for BSC, I can check with which swap pair it is loaded (for example on PancakeSwap).
In the example below we see that the exchange pair is with Bnb:

The writing in red warns me that there is something it does not do. Indeed, if I press on Holders (here two versions of the token have been made, the sums I read or 4,000 and 2,700 dollars are low because then the exit scam happened), I can see Fries / Bnb (LP). It is known that the liquidity (98.67%) is not blocked and can be withdrawn from the liquidity pool:

We notice the difference with this token where we see that 99.54% of the loaded supply has been locked in the pool (cannot be removed):

On Team Finance, in addition to seeing some tokens blocked in the explorer, it is also possible to block liquidity. Other services used are CryptexLock and Unicrypt

🟠 BURN

As we know, many tokens work via burn: transactions burn part of the supply. It can often happen that the promised quantities are not actually burned. Burns occur at these addresses: 0x000000000000000000000000000000000000dead

🟠 OTHER ADVICE ON CONTRACTS

-Go to Etherscan (or other explorer), paste the token contract and in "contract" read the code. You can give a first glance to the contract itself: if the "green" tick is ticked, it means that the contract is verified. If it doesn't, it could be a scam. However you have to be careful! Even if the contract is verified, it could be a scam.

-Always on Etherscan, read the "comments" section, if many write that it is a scam... it could be!

-Check the DappRadar blacklist (if the contract is present, it is a scam): BlackList (DappRadar)

-Check if it is present in DappRadar explorer: Explorer (DappRadar). If it is present and you read similar notifications, proceed carefully:

🟠 HONEYPOT

These are tokens with bugs and errors. When attackers try to exploit this bug, they are attacked themselves.
It could also be understood as the inability to sell a token. It is possible to buy it but not to sell it. You should always check sales transactions before buying a token! Honeypot is actually a fairly generic term. These are also "traps" that lure hackers and criminals into a wallet, purposely providing it with its seed. When the criminal sends gas to move worthless tokens (such as Minereum) from the wallet, a script diverts the transaction to another wallet.
In this way, the unethical people are, in turn, scammed, the Eth intended to pay for the transaction will never arrive. You can check them out here: Honeypot Detector

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🚀 Want to start crypto? Click on the bowl of noodles ➡ 🍜
(just because i like it 😎...)

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