To avoid getting caught by scam memecoins, it is important to thoroughly check the projects and follow a number of steps to minimize the risks. Here is how to do it:
1. Verification of contract and token code
- Code Publicity: Smart contract code must be publicly available. If the code is closed, it is a warning sign.
- Audits: Find out if your code has been independently audited by third parties (CertiK, Hacken, etc.). Audits help identify vulnerabilities and potential fraudulent schemes.
- Fraud check: Use services like Token Sniffer or BSCCheck to check the contract for typical risks (e.g. inability to sell the token or too high a transaction tax).
2. Liquidity and liquidity freezing
- Frozen Liquidity: Find out if liquidity has been locked (e.g. via Unicrypt or Team.Finance platforms). If liquidity is not locked, developers can "pull" money, which is called a rug pull.
- Liquidity management: Avoid projects where the creators have full control over liquidity or a large percentage of tokens. This indicates a high risk of fraud.
3. Team and project analysis
- Team anonymity: If the team is completely anonymous and hides their identities, this increases the risks. Check the developers' social media profiles and their past projects.
- Realistic Roadmap: Study the project plans. If the promises seem unrealistic or too ambitious (e.g. guaranteed 1000x growth), it is most likely a scam.
- Activity and transparency: The project's support through AMA sessions (questions and answers), regular updates and interaction with the community speaks of its reliability.
4. Tokenomics check
- Token Distribution: Study how tokens are distributed among the team, investors, and community. If a large share of tokens belongs to developers, this is a risk.
- Token burning and reward mechanisms: Some memecoins use complex reward and burning mechanisms that can be manipulated by creators.
5. Blockchain activity
- Transaction transparency: Analyze the token activity on the blockchain via BscScan or Etherscan. If most of the tokens are at one address, this is a signal for caution.
- Transaction History: See how often transactions occur, how many token holders there are, and what the concentration of tokens is in large wallets.
6. Social networks and community
- Fake followers: Check the followers' activity on the project's social networks. If there are a large number of followers but a low level of interaction, this may indicate bots and fraud.
- Too aggressive marketing: If a project is being aggressively promoted with promises of big profits, this is often a sign of a scam.
7. Avoid FOMO (fear of missing out)
- Don't invest right away: If a project promises quick profits and pushes you to buy urgently, it may be an attempt to create FOMO. Such projects are often scams.
- Gradual entry: It is better to invest small amounts and watch the development of the project.
Using all of these verification methods will help you avoid scams and make more informed choices when investing in memecoins.
Stay tuned for updates! @VXLI
