Known as HoneyPots, there are tokens which can prevent holders from selling them.
Scammers trick a victim into purchasing a token. Then the scammers use the tokens contract to stop the victim from being able to selling their tokens.
After the victim cannot sell their tokens the scammers remove the liquidity in the pool, this is known as a rug pull.
If successful, the scammers take the ETH in the liquidity pool and the victim is stuck holding a worthless and unsellable token.
There are different ways scammers prevent holders from selling their token.
Here is a list of a few different methods these scammers use:
- A black list function: Prevents specific addresses being able to trade normally.
- A whitelist function: A whitelist means some addresses may not be able to trade normally.
- An anti-whale function: The number of token transactions is limited (per wallet or in general).
- A cooldown function: Prevents the token from being sold for a certain time after being bought.
- A suspend trading function: Prevents the token from being bought or sold entirely.
- A high sell tax: A tax above 10% is considered a high, and a tax more than 50% means the token may not be tradable.
- Tax can be modified: The contract owner has the authority to modify the transaction tax. If the transaction tax is increased to more than 49%, the tokens will not be able to be traded.
- A change balance function: This gives an address the authority to modify the balance of tokens at other addresses.
- A proxy contract: A proxy contract means contract owner can modify the functions of the token and possibly affect the price.
- A hidden owner: A developer can still manipulate the contract even if the ownership has been abandoned.
To protect yourself from these scams, follow these steps:
- Run the contract address through GoPlus Labs.
- Runt the contract address through TokenSniffer.
- Check to see if multiple address can sell the token using DexScreener and Defined.fi.
- Check Twitter to see what holders are saying about the token.
This is not an extensive list, please do your own research before swapping for any token.