A honeypot is a token whose contract is written so that regular holders cannot sell, or can only sell at a punishing cost, while the creator can. Because buys keep succeeding, the chart climbs and attracts more victims.
How the trap works
- Sell blocks: sells revert unless the wallet is on an approved list.
- Extreme sell tax: selling is allowed but nearly everything is taken as a fee.
- Blacklists: the owner can add wallets that then cannot trade.
- Pausable trading: the owner can switch trading off after enough people have bought.
- Anti-whale limits abused: tiny maximum transaction sizes make selling impractical.
Warning signs
- A chart with many buys and almost no sells.
- Verified source code that contains owner-only functions affecting transfers or tax.
- Sell tax far above buy tax, or a tax that the owner can change.
- A security scan that reports a cannot-sell or high-tax flag.
How to protect yourself
- Run a security scan on the contract before buying. Scanners simulate a sell and read the code for known traps.
- Try a very small test buy and a test sell before committing real size, remembering that some traps only trigger later.
- Be suspicious of anything that cannot be sold in a test or that restricts transfers to specific addresses.