A honeypot (or "honey jar") in the context of cryptocurrencies is a type of scam designed to attract users with no knowledge who want to multiply their money by investing in a project or smart contract that seems "good" but contains a hidden mechanism to steal as much money as possible.

Let me explain how it works briefly and how to detect it:

How does a honeypot work?

Initial attraction:

  • Scammers create a token or project that seems attractive, usually with promises of high returns or quick profits.

  • They promote it on social media, communities, forums, or even on decentralized exchanges.

Manipulation of the smart contract:

  • The contract is designed in such a way that users can buy the token without problems, but it makes it impossible for them to sell it by incentivizing HODL, staking, or simply preventing the sale of tokens or avoiding the withdrawal of their money by claiming external problems or that the user has made "a mistake."

  • Scammers can manipulate permissions, transfer functions, or settings to restrict buyers' transactions.

Benefit for the scammers:

  • While victims continue to buy the token, scammers can sell their own tokens, increasing their value.

  • Once the price rises enough, scammers drain the liquidity, taking all the money and leaving victims with worthless tokens.

How to identify a honeypot?

Review the smart contract:

  • On platforms like Etherscan or BscScan among others, check the functions of the contract. If you have no technical experience, look for tools or services that automatically analyze contracts.

  • Be cautious with contracts that have excessive permissions or functions that restrict the sale of tokens.

Locked liquidity:

  • In a legitimate project, liquidity is usually locked for a specific period to ensure the safety of investors.

  • If there is no information about the liquidity or it is not locked, it is a red flag.

Promises of exaggerated returns:

  • If the project promises unrealistic or very quick profits, it is likely to be a honeypot, avoid it and don't do mental gymnastics to tell yourself "I'm going to win with this," because it's not going to happen.

Suspicious trading volume:

  • Watch the buying and selling volume. If there are many purchases but few or no sales, it could be a honeypot.

Little or no transparency:

  • If the team behind the project has no public information, there are no audits conducted on the contract, or the project's community is small and inactive, it is better to stay away if you like to keep your money with you.

Practical example:

  • A token appears on a decentralized exchange like PancakeSwap with a catchy name, for example, "SuperRichToken."

  • You start buying, but when you try to sell, the transaction always fails.

  • Upon reviewing, you notice that sales are restricted for everyone except the token creators.

* You have already made the mistake and the administrators will take the money whenever they please to pay for boats, dr**** and pu*** *

Tips to avoid falling into a honeypot:

  1. Do thorough research:
    Always research the project, review the contract, and look for opinions in the community.

  2. Use analysis tools:
    There are services like Token Sniffer or Honeypot.is that automatically analyze contracts for potential scams.

  3. Start with small amounts:
    If you decide to invest in a new token, try with a small amount to minimize risk.

  4. Check liquidity and audits:
    Prefer projects with locked liquidity and audits conducted by recognized firms.

In summary

A honeypot is a trap designed to steal from the new, the lazy, and the unsuspecting.

Although opportunities in cryptocurrencies can be tempting, you should always research and act cautiously to avoid falling into this type of scam.

If something seems too good to be true, it probably is.

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