⚠️Common Scams
A list of common scams throughout the crypto space, keep your eyes peeled for red flags and avoid these at all costs!
Rugs 💀
The worst of the worst, if you've been in crypto for a while, especially on the Degen side of things you've probably been fisted by a RUG. A rug is essentially when a developer removes liquidity or otherwise drains project funds by nefarious means! What to look out for: 👊🏿 Liquidity not locked or locked for a short period of time, if the liquidity of a token is not secured or "locked" the developer can remove it at any time, running away with the funds and leaving the holders with no way to sell their tokens. 👊🏿 Use a CA scanner or Dextools to check the AMOUNT and DURATION of the liquidity locked, if it isn't secured you might want to stay away! Alternative Rugs: 👊🏿"Time Rugs" making promises but no delivery from the project, constant delays, missed deadlines or broken promises can constitute a time rug! Rugging you of time and often funds.
Honeypots 🍯
Honeypots are usually fairly simple to spot, but if you are sniping or buying launches they can catch you out easily. A honeypot is when the token is unsellable or the sell tax is 100% which equates to the same thing. What to look out for: 👊🏿 Use Dextools or Dexscreener to check there are sells being made on the contract, if there are lots of buys coming in and NO SELLS whatsoever it is likely a honeypot 👊🏿 Use a CA scanner or Dextools to check the contract tax values, if the sell tax is really high or 100% then you won't be able to sell your tokens, at least not for a profit, this is also a honeypot. Alternative Honeypots: 👊🏿 "Delayed Honeypots" this is when the token is initially sellable throughout launch but as the liquidity grows and the token value increases the Developer changes the sell tax to 100% or disables trading. These are hard to spot and commonplace in degen world. You can keep tabs on the tax values using telegram bots such as TTF or using Etherscan. Stay frosty fisters!
Tax Farms 👨🌾
Tax farms occur when a developer of a token or project does just enough to keep a token trading, but spends little of the marketing funds, usually making empty promises and teaming up with low-cost hype men and raiders to keep the community engaged as possible, whilst sitting back, doing nothing and cashing in on the projects buy/sell taxes. What to look out for: 👊🏿 Higher taxes than are needed to support the proposed projects plans and no clear use-case for the funds. 👊🏿 Dev's spending as little of the taxes as they possibly can so they can walk away with the maximum amount of their victims funds when they finally figure out they've been fisted. 👊🏿 Low-cost & Low-effort websites, mediums or other forms of socials, cheap hype men and shillers posting in the project chats.
MEV Bot Sandwich Attacks 🥪
A MEV bot is essentially a piece of software that analyzes blockchain transactions, identifying arbitrage opportunities on behalf of its owner. MEV stands for "Maximal Extractable Value". A sandwich attack is when a MEV bot front-runs (gets in before) your transaction, e.g. placing a large buy before your buy, meaning you pay more for your tokens, and they are immediately in profit, it then quickly sells again to profit from the difference created by your buy. They may only scalp a small amount, but doing this across 1000s of transactions a day, can be very lucrative.
👊🏿 Use the lowest possible slippage on your transaction to get it through, using high slippage opens the door for MEV bots to sweep in and scoop up the differential in the token amount you are willing to accept. Some DEX's like 1inch have an AUTO slippage selection, this often works fine, but be extra vigilant on high value buys/sells. 👊🏿 Use a MEV blocker RPC such as the one in our Ape Responsibly section. 👊🏿 Use a Sniper with MEV protection, see our Snipers section for some options!
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