Honeypot scams are deceptive schemes that entice users with the promise of quick profits

Understanding the risks of token contracts helps you avoid scams and make safer decisions. Remain vigilant by staying informed about common warning signs

Honeypot scams are a deceptive scheme where users are enticed by the promise of quick profits, leading them to purchase tokens that have their sale programmatically restricted, ultimately resulting in financial loss.

To avoid this scam, it's crucial to understand the potential risks associated with token contracts and make informed decisions.

Here are some key points to consider:

* A honeypot is a malicious smart contract, usually coded to let you buy a token, but not sell or withdraw funds.

* This scam relies on hype and FOMO to quickly bring in users to the token, which is later programmed against them.

* A token that is hyped in multiple Telegram groups, has fake ads running on X, and is being spammed in WhatsApp is likely a honeypot.

* To avoid a honeypot, you may want to look at the opposite – a token with no external hype, a small community, and low activity levels.

* Binance Wallet provides advanced threat detection and analysis, collecting data on suspicious tokens and highlighting them in the app.

* When you try to interact with a risky or malicious token, Binance Wallet will notify you with high-risk warning messages on the main token page and provide a detailed breakdown in the Token Audit tab.

To get to this tab, first click on the token of interest on the app homepage or market pages. You will see the Audit tab below the token name and address. Clicking on it allows you to view the detected risks, such as suspicious tax rates, smart contract irregularities, and other signs that the token could compromise your funds.

Always review the risk details on the audit page before interacting with a token.

The page also features a feedback section at the bottom, allowing you to reach out to us with any relevant observations of your own, in case you notice any inconsistencies not yet reflected on the page.

Best Practices: A Safety Checklist

While Binance Wallet provides advanced threat detection and analysis for your protection, completing this process may require additional time. Your active participation and careful review of each step, while performing multiple confirmations are crucial to maintaining security.

Below are some tips that will help you steer clear of honeypot scams:

Conduct Thorough Research (DYOR): Never rely solely on hype or recommendations. Always verify the legitimacy of a token you are going to interact with and its development team. Check if the contract code is verified on reputable blockchain explorers such as Etherscan or BscScan. If you have coding knowledge, review the contract for suspicious functions, such as those that restrict selling or impose excessive fees.

Review Trading Activity: Analyze the token’s trading history for red flags such as a lack of sell transactions, concentrated token holdings among a small group, or unexplained liquidity removals by developers.

Use Security Tools to Analyze the Contract: Utilize reputable security tools to scan smart contracts for potential vulnerabilities or malicious features. These tools can provide insights into possible risks before you interact with a token.

By following these steps – before you put your hand in the jar rather than after you get stuck – you can make informed decisions and reduce the likelihood of falling victim to a honeypot scam.

Final Thoughts

Honeypot scams are a rising threat in the Web3 space, exploiting the very technology that promises decentralization and autonomy. By understanding how these scams work and utilizing tools like Binance Wallet's audit features, users can better protect themselves from financial loss. Vigilance, thorough research, and leveraging security tools are essential practices for anyone navigating the Web3 landscape. As the ecosystem continues to grow, staying informed and proactive will be key to safeguarding your investments and ensuring a secure and rewarding experience in the world of decentralized finance.