DEX users trading new or unknown tokens are constantly at risk of losing funds due to a variety of scams perpetrated by the token issuer. As a result, they’re obliged to be constantly alert to common types of token scam – as well as the ever more sophisticated models that are frequently introduced. To help protect users, Sushi has teamed up with GoPlus Security to make dodgy tokens easier to identify.
DEX Diligence as a Service
The permissionless design of blockchain means that anyone can launch a token and encode its smart contract with rules concerning the token’s behavior. Most of the time, these rules are benign, covering such matters as the token name, supply, and any mechanics governing its burning, liquidity, or tax. For instance, it’s relatively easy to create a token with a 5% sell tax that redistributes this fee to the liquidity pool to grow protocol liquidity.
But for every one legitimate token that launches on popular chains such as Base and Ethereum, there are a dozen honeypots in which the buyer is destined to lose all their money. This is where services such as GoPlus Security prove their worth, alerting users to the hidden risks that can lay cloaked in the token contract.
Sushi has integrated GoPlus’s Token Security API which provides token risk assessment, transaction security checks, and detailed token information. It helps end users identify tokens that present a higher risk of being scammed and to thereby avoid purchasing them.
Honeypots That Keep on Pumping
Scam tokens, commonly known as honeypots, typically present very attractive charts that look alluring to buyers. Everyone is enticed by an “up only” chart and for many honeypots that’s literally what happens because after buying the token, you’re unable to sell. This is because the smart contract only allows whitelisted addresses – i.e. those belonging to the contract creator – to sell.
But not all honeypot tokens fall into that bracket: others do allow selling, but are created using unusually deep liquidity to entice buyers into thinking they’re purchasing the next 100x memecoin, only the liquidity isn’t locked, allowing the contract creator to rugpull it at any time. Such honeypots can climb impressively high before the liquidity is suddenly pulled and everyone loses.
GoPlusSecurity is already widely used by EVM platforms to alert users to common scams. It’s in place on popular DEX aggregator Dexscreener, for instance, where it helps users steer clear of a multitude of fraudulent projects. In addition to assessing basic token contract information such as whether the token is sellable, its API can determine whether the SC is open source, a proxy contract, mintable (i.e. the creator can issue more tokens), has a trading cooldown, blacklist, and much more.
Safety in a Sea of Sharks
Sushi’s decision to integrate GoPlus Security’s token checker should help users steer clear of the majority of honeypots when interacting directly with the Sushi DEX. Its API will provide a warning message whenever the user interacts with a token that isn’t in Sushi’s default list and will apply a risk rating to the token in question.
Valuable as this service is, traders considering buying new and unknown tokens should also conduct their own due diligence, searching for the token address on Twitter, checking the project’s Twitter or Telegram to see if replies are allowed on posts, and checking what other crypto Twitter users have to say. Scammers are always gonna scam. Through Sushi and GoPlus Security’s collaboration, DEX users have another weapon in their arsenal against scammers. The battle may not be over, but it’s a victory all the same.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
