Modern blockchains are full of promises of quick bucks and easy money. However, it is crucial to know if 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 released on a regular basis, it is becoming increasingly difficult to determine if a token is safe and not scam-proof.
In this article, we will explore effective ways to check tokens and projects for scams. These methods can help you avoid scams and increase your chances of achieving profitable growth!
Start with the Basics
To check the legitimacy of a coin, you can always start with the most accessible methods, such as searching on Google and Twitter. This includes researching the coin 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.
View the token on Twitter and Telegram
A verified Twitter account can often help prove the legitimacy of a project. Additionally, you can participate in token discussions to understand the community’s perspectives and opinions.
Be cautious of projects with lots of social media followers but little activity. Automated comments from spam accounts should also be a concern. If all the comments are “this is a great project” and “the moon is coming,” be wary.
To view token information on Twitter, type: $TICKER in the search bar.
Or use#TOKEN_NAMEto find out more 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.
Often, the first news about a coin comes from news bots or influencers, such as in the following cases:
An important factor is to study the project’s Twitter profile. 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 can’t find any links to the project (no website, Twitter, or Telegram), this is a clear red flag that indicates a higher chance of a scam.
When analyzing a project's Telegram, pay attention to the community's attitude toward 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, it’s likely a scam. When you search for the token address, you should easily find links to a block explorer, official website, and whitepaper. If not, consider this a red flag.
Also, be aware that Google ads are often free areas for scam sites. Never click on ads at the top of Google search results. Always make sure you are visiting the official website to avoid clicking on wallet cleaners or other hacker software.
Check in Explorer
Visit the block explorer of 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 a clear warning sign. If the code is unverified, you may be dealing with a scam.
If you want to inspect a token deployed on another network, use this browser:
Basescan — https://basescan.org/
Solana—— https://solscan.io/
Ton — https://tonscan.org/
BSC — https://bscscan.com/
Why don't scammers verify their codes?
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.
View the comments section
This is a simple one, but various block explorers usually have a comment 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 comment 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 commented 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 coins, you can check the blacklist to see if your coin is on the list. If the coin address is on the list, then the coin is definitely a scam.
Check how many exchanges the token is listed on
If a token is only traded on a few decentralized exchanges (DEX), it is almost certainly a scam. Listing on centralized exchanges 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 decentralized exchanges is necessarily a scam? No. Some projects do not require a large trading volume, and other projects may only offer tokens to Web3 users and not to token traders. Since most meme coins show significant gains before appearing on CEXs, having a token on a CEX is not a strict criterion for token analysis. However, cryptocurrencies 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 liquidity of the 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 such as Uniswap V2 or other decentralized exchanges. Liquidity refers to the amount of cryptocurrencies or tokens locked in smart contracts that allow people to buy and sell assets through (decentralized) exchanges. If liquidity is below $100,000 or drops significantly, you are most likely dealing with a scam. You can check the liquidity volume on the well-known DexScreener, where you can see it in the middle right section after entering the token contract: 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 important to consider the fully diluted valuation (FDV) or market capitalization. The larger these numbers are, the more purchases are required for the token price to rise. Good indicators for such tokens are liquidity volume starting from $1 million, a token age of more than 2 days, and a liquidity/FDV ratio of about 1:10.
Check third-party analytics 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 your coins on honeypots. Honeypots are smart contracts that intentionally create obvious software flaws. When an attacker attempts to exploit the flaw, another hidden piece of code is triggered that essentially attacks the attacker. Whether you intend to be a crypto hacker or not, you should always avoid honeypots.
Learn the basics of DEXScreener
It records the current token price and helps you assess the true value of tokens in real time as well as identify major holders.
For example, to identify users who recently purchased tokens for more than $5,000, click “USD” at the bottom of the DEXScreener:
Enter the amount of $5,000 (optionally, you can specify a maximum token purchase amount) and press Enter or Apply:
After this, all recent buyers of tokens at a price of $5,000 or more will be shown:
You can also view the buy zones for certain wallets. To do this, click on the cup icon next to the desired wallet and view all buy zones and token purchase levels on the wallet chart:
Analyzing Tokens Using De.Fi Antivirus
De.Fi, a project that recently distributed an airdrop to its community, acts as an antivirus by evaluating token contracts based on various parameters and providing an estimated security balance for the token:
Using TTF Bot
This versatile bot can quickly and automatically analyze coins, 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 size of the tax on the token. If the tax is zero, then this is a sure thing.
Also, pay attention to the number of holders and their share of supply:
If the top 10 holders hold more than 30-50% of the token supply, the likelihood of encountering a scam is higher.
By using the above analysis tools, you can learn how to avoid scam coins and profit from legitimate coins. However, always remember to do your own research (DYOR).
