In the rapidly changing world of decentralized finance (DeFi), scams are also evolving, and one of the most dangerous is the honeypot. In this article, we will explore what a honeypot is, how it works, and what steps can be taken to protect against such schemes.
What is a honeypot in cryptocurrency?
A honeypot is a type of scam based on smart contracts that allows users to buy a token while blocking the ability to sell it, effectively locking up their funds. At first glance, everything seems normal: there is liquidity and price movement. However, once purchased, attempts to sell the token fail silently, leaving funds trapped in the contract. Typically, these schemes are built using complex code embedded with malicious logic into the smart contract written on Ethereum or BNB Smart Chain.
Types of honeypot schemes
There are several common types of honeypots, including: * **Smart contract honeypots:** Allow users to purchase tokens but secretly block selling through contract code. * **High sell tax honeypots:** Selling may be technically allowed but incurs a massive fee, often up to 100%. * **Fake liquidity pools:** Some tokens show real trading activity, but liquidity disappears after purchase. * **Hardware wallet honeypots:** These scams involve physical wallets sold with pre-loaded private keys known to scammers.
How to prevent honeypot scams?
You can avoid falling into these traps by following several recommendations: * **Test small sells before making large investments:** Buy a small amount and try selling it. * **Use smart contract scanners:** Tools like Honeypot.is can help flag traps. * **Check for real sell activity:** Look for authentic sales evidence from normal wallets. * **Beware of sudden hype:** If a token suddenly trends with unrealistic promises, take a pause.
Honeypots represent a widespread and perilous form of scams in the cryptocurrency world. Understanding how they operate and applying security recommendations can help prevent financial losses.
