Popular Science | How to avoid buying scam tokens?

Original title: "How to check if a token is a scam and achieve 100x growth?"

Original author: GeekTop, Web3 News

Modern blockchains are full of promises of quick money and easy money. However, it is crucial to know whether the tokens you hold are part of an elaborate scam designed to defraud you of your hard-earned money. With thousands of different meme coins being issued on a regular basis, it is becoming increasingly difficult to determine whether a token is safe and free from scams.

In this article, we will explore effective ways to check if tokens and projects are scams. These methods can help you avoid scams and increase your chances of achieving profitable growth!

To check the legitimacy of a token, you can always start with the most accessible methods, such as searching on Google and Twitter. This includes researching the token and its team, checking for red flags or warning signs, and looking for reliable sources of information, such as official websites, news articles, and verified social media accounts.

Check for tokens on Twitter and Telegram

Verified Twitter accounts can often help prove the legitimacy of a project. Additionally, you can participate in token discussions to get a sense of the community’s perspectives and opinions.

Be cautious of projects that have a large number of social media followers but little activity. Automated comments from spam accounts should also be a cause for concern. If all the comments are “this is a great project” and “the moon is coming,” beware.

To check for token information on Twitter, type: $TICKER in the search bar.

Or use #TOKEN_NAME to find more information about the project:

If the token was recently launched, check for the first news about the token first. To do this, type $TICKER in the search bar and scroll to the bottom of the feed.

Usually, the first news about a token comes from a news bot or influencer, such as in the following case:

An important factor is to study the project's profile on Twitter. If it posts repetitive news and uniform calls to buy, the likelihood of a scam increases.

To find token projects on Twitter, go to DexScreener and insert the contract of the token (for example, Ponke - non-financial advice):

In the upper right corner, you will see the project's website, Twitter, and Telegram. By visiting these links, you can research the project:

If you cannot find any project links (no website, Twitter, or Telegram), this is a clear red flag that indicates a high probability of a scam.

When analyzing the project's Telegram, pay attention to the community's attitude towards the project. If the community strongly believes in and supports the project, then this is a positive sign for potential short-term growth.

Check the Token Address in Google Search

If you search the internet and can’t find a clear homepage, “whitepaper”, or obvious purpose for the token, then it’s likely a scam. When you search for the token address, you should easily find links to block explorers, official websites, and whitepapers. If not, consider this a red flag.

Also, be aware that Google ads are often a free zone for scam sites. Never click on ads at the top of Google search results. Always make sure you’re visiting the official website to avoid clicking on wallet cleaners or other hacker software.

Check in Explorer

Visit the block explorer for your chosen chain and see if the source code is verified. For example, on Ethereum’s block explorer Etherscan, it looks like this. The code shown below is unverified, which should be an obvious warning sign. If the code is unverified, you may be dealing with a scam.

If you want to inspect tokens deployed on another network, use the following browsers:

Base — https://basescan.org/

Solana — https://solscan.io/

Ton — https://tonscan.org/

BSC — https://bscscan.com/

Why don’t scammers verify their code?

Because once the source code of a contract is public, everyone can understand the intention behind the contract. Then they will see a ridiculous tax system or a way for the developers to steal all your tokens.

Check the Comments Section

It’s simple, but various block explorers usually have a comments section. In most cases, there are no comments, but if the project is a scam, you will most likely find an angry mob in the comments section. So make sure to check it out. If someone calls it a scam, 99% of the time, it is a scam. Also don’t hesitate to leave a comment if you have fallen victim to such activity.

When analyzing a coin, the comments section can be found on this line (example on Etherscan), but for most coins it is hidden.

Check DappRadar Blacklist

DappRadar allows the community to help identify scam tokens. Once found, you can add it to the token blacklist on GitHub.

Also, if you are researching tokens, you can check the blacklist to see if your token is on the list. If the token address is on the list, then the token is definitely a scam.

Check how many exchanges the token is listed on

If the token is only traded on a few decentralized exchanges (DEX), then it is almost certainly a scam. Listing on a centralized exchange requires KYC and additional trust, and the larger the exchange, the better the reputation of the listed token.

Does this mean that a token listed only on a decentralized exchange is definitely a scam? No. Some projects don’t need a lot of trading volume, others may only offer tokens to Web3 users and not to token traders.

Since most meme coins show significant gains before appearing on a CEX, having a token on a CEX is not a strict criteria for token analysis.

However, cryptocurrencies that are listed only on decentralized exchanges represent a higher risk investment.

To find which exchanges list the token, go to Coingecko, enter the token address in the Search bar, and select Markets:

If the token is on at least one CEX, it is a green signal. In this case, the token is listed on CEXs: Bybit, BingX, Bitget, Gate.io:

Check the amount of liquidity of a token

Before investing in a token, you can check the overall demand and available liquidity. It is very easy to check the liquidity of a token on platforms like Uniswap V2 or other decentralized exchanges.

Liquidity refers to the amount of cryptocurrency or tokens locked in smart contracts that allow people to buy and sell assets through (decentralized) exchanges. If liquidity is below $100,000 or has dropped significantly, you are most likely dealing with a scam.

You can check the liquidity volume on the well-known DexScreener, and once you enter the token contract, you can see the liquidity volume in the middle part on the right:

If a lock symbol in a green circle appears next to the liquidity volume, it means that liquidity is locked - another green sign for the project.

In addition, it is also important to consider the fully diluted valuation (FDV) or market capitalization. The higher these numbers, the greater the purchase volume required for the token price to rise.

Good indicators for such tokens are liquidity volume starting from $1 million, token age of more than 2 days, and a liquidity/FDV ratio of about 1:10.

Check third-party analysis tools

Here are some token analysis tools:

Smell test - an automated audit of a token. The lower its score (out of 100), the more likely it is that the token is a scam.

Check tokens on honeypots. A honeypot is a smart contract that intentionally creates an obvious software flaw. When an attacker attempts to exploit the vulnerability, another hidden piece of code is triggered, essentially attacking the attacker. Whether you plan to be a crypto hacker or not, you should always avoid honeypots.

Learn the basics of DEXScreener

It records current token prices and helps you assess the true value of tokens in real time as well as identify major holders.

For example, to identify users who have recently purchased tokens for more than $5,000, click on "USD" at the bottom of DEXScreener:

Enter the amount $5,000 (optionally, you can specify a maximum token purchase amount) and press "Enter" or "Apply":

After this, all recent buyers of tokens for $5,000 or more will be displayed:

You can also view the purchase area for certain wallets. To do this, click on the cup icon next to the desired wallet and view all the buy zones and token purchase levels on the wallet chart: Analyze the coin with De.Fi Antivirus De.Fi, a project that recently distributed an airdrop to its community, acts as an antivirus by evaluating the token contract based on various parameters and providing an estimated security balance for the token: 9999_18 9999_19 Analyze the coin with De.Fi Antivirus Analyze the coin with De.Fi Antivirus Analyze the coin with De.Fi Antivirus De.Fi, a project that recently distributed an airdrop to its community, acts as an antivirus by evaluating the token contract based on various parameters and providing an estimated security balance for the token: Analyze the coin with De.Fi Antivirus This multi-functional bot can analyze the token quickly and automatically, which is very convenient for coin hunters. Pay special attention to the amount of liquidity locked or destroyed. If liquidity is destroyed, it is a green signal. Also, pay attention to the tax scale of the token. If the tax is zero, it is a sure fact.

Also, pay attention to the number of holders and the supply they own:

If the top 10 holders hold more than 30-50% of the token supply, the likelihood of being a scam is higher.

Conclusion

By using the above analysis tools, you can learn how to avoid scam tokens and profit from legitimate tokens. However, always remember to do your own research (DYOR).

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