How Honeypot Works :
Creators launch a new token and start artificially buying to simulate demand
This pumps up the token price, since the contract only allows buys
Investors see the token pumping and rush to buy (FOMO)
Investors then realize they can’t sell the token due to the contract locking sells
Creators keep buying to further pump the price and attract more victims
Creators sell their own tokens, draining value from the pumped up honeypot.
Investors r left trapped, unable to sell their tokens
Creators walk away w profits from dumping, investors lose
So in essence:
•Creators fake hype
• Investors get lured in
• Buys allowed, sells blocked
• Creators profit by dumping
• investors lose as pot drains
Some Honeypots on BASE that you need to be aware of:
Let’s examine a live example:
- $BASED ( 0x06C0 )
Take a close look at the image below:
• You’ll notice a large number of consecutive buys, with only one sell transaction. It makes us wonder who is behind this.
• Interestingly, the same person who created the contract and a select few whitelisted individuals have permission to sell.
Furthermore, attempting to swap this token was unsuccessful:
To test it out, I invested $10 in the $BASED token. It surged by 10x, and when I tried to swap it back to ETH, I encountered an error message stating: “Unknown error: “Internal JSON-RPC error.” Try increasing your slippage tolerance.”
So, how can you identify honeypots ?
Unfortunately, there are no specific tools available on the Base chain.
But you can follow these steps to check if a token is a honeypot:
- Go to the transaction field and check for a pattern of constant buys with minimal or no selling.
For instance, if there is a series of 100 buys and only one sell in between, it’s likely a honeypot.
- Check for bot transactions ( check image )
What tactics do honeypots adopt?
To rank higher on the dexscreen, they focus on Txn counts.
They employ bots to spam multiple transactions of less than 0.01 ETH, artificially inflating their position on the charts and trending sections.