Honeypot Token Prevention Guide
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New projects and cryptocurrencies in the digital currency market are constantly emerging. Due to their potential for high returns, they also hide significant risks for investors. The term "Honeypot Token" refers to cryptocurrencies that can only be bought and not sold, or those with extremely poor liquidity and withdrawal issues. This terminology is commonly used by investors to describe tokens that appear attractive initially but ultimately restrict users from accessing their funds. In this fast-evolving market, understanding the characteristics and risks of honeypot tokens has become an essential lesson for every investor.
1. What is a Honeypot Token?
A honeypot token is a term often used to describe cryptocurrencies or projects with "buy only, no sell" characteristics. It typically involves the following scenarios:
- Withdrawal Restrictions: The project limits users from withdrawing their funds, trapping their money.
- Low Liquidity: The market lacks sufficient trading depth, making it easy to buy but difficult to sell, hindering liquidity.
- Scam Projects: Some malicious projects intentionally design mechanisms to trap funds, restricting users from freely trading or withdrawing after they invest.
2. Reasons for Getting Trapped in a Honeypot Scheme
2.1 Clone Projects: Clone projects copy the names, logos, and token contracts of well-known projects. If you don’t carefully check the contract address, you might end up purchasing a Honeypot Token.
2.2 Induced Investments: Investors are often tricked into buying Honeypot Tokens through fraudulent promotions or misleading advertisements in communities and other channels.
2.3 Gambling Mentality: Some investors, knowing that the project is unreliable, still invest in Honeypot projects with a "get out quickly and nothing bad will happen" gambling mentality.
3. Common Types of Honeypot Schemes
3.1 Controlled Trading: The creator of the Honeypot scheme can enable or disable the token's trading function. When investors buy, they can trade, but when the token price increases, they are unable to sell.
3.2 Variable Tax Rates: The creator sets a high sales tax rate for token transactions. Investors attempting to sell their tokens will be charged excessive taxes.
3.3 Blacklisting Addresses: The creator places the addresses of investors who have purchased tokens onto a blacklist, preventing them from selling their tokens.
3.4 Token Balance Manipulation: The creator alters the investor's token balance through the smart contract, ensuring that only the contract's internal record reflects the actual balance. Investors see the normal balance in their browser, but in reality, they cannot sell tokens beyond what is recorded in the contract.
3.5 Selling Thresholds: The creator sets an unrealistic threshold for selling, which is much higher than the number of tokens an investor holds, effectively preventing them from selling.
4. How to Prevent Falling into a Honeypot Scheme
4.1 Verify Project Background: When searching for a token, prioritize using the contract address rather than the token name to avoid falling into clone project traps.
4.2 Stay Alert: Be cautious of promotions from friends in communities and be wary of high-return advertisements. High returns often mean high risks.
4.3 Check Token Audits: Use blockchain explorers (such as SolScan, BscScan) to check whether the project’s token has been audited and verified.
5. How to Use MEXC DEX+ to Buy On-Chain Hot Tokens
MEXC DEX+ is a decentralized trading aggregation platform that integrates multiple DEXs, offering users the best trading paths, reducing slippage, and optimizing trading costs. It is the latest decentralized trading solution launched by MEXC.
On the DEX+ page, you can search for tokens by copying their contract address. On the trading page, you can cross-check the token through various dimensions, such as the token contract address, security checks, audit information, holding addresses, and circulation data to avoid purchasing Honeypot Tokens.
For more details about DEX+, you can refer to the articles How to Use MEXC DEX+ and MEXC DEX+ FAQ.
Disclaimer: This material does not constitute investment, tax, legal, financial, accounting, advisory, or any other related advice. It also does not serve as a recommendation to buy, sell, or hold any assets. MEXC Learn provides information for reference only and does not constitute any form of investment advice. Please ensure you fully understand the associated risks and invest with caution. All investment decisions made by users are independent of this platform.