Avoiding Scams and Rugpulls

With the prevalence of scams and rugpulls in the crypto market, it’s essential to perform due diligence. Here are ways to use Bitfoot and other methods to minimize risk.

• Common Red Flags in New Tokens

  • Unlocked Liquidity: Tokens with unlocked liquidity allow the developers to withdraw all funds, which is a common rugpull tactic. Look for tokens with liquidity locks through reputable platforms like Team Finance or Unicrypt.

  • Unverified Contracts: Unverified contracts make it difficult to examine a token’s code and see if it has malicious functions. Avoid tokens with unverified contracts.

  • High Buy/Sell Taxes: Excessively high taxes (e.g., 20%+ for each transaction) may indicate the developer’s intent to drain funds from traders.

  • Suspicious Holder Distribution: If a small number of wallets hold the majority of the tokens, it’s easier for them to dump, tanking the price.

• Using Bitfoot’s Alerts and Tools for Safety Checks

  • Token Verification: Use Bitfoot’s alerts to check whether a token is verified and has locked liquidity.

  • Liquidity Monitoring: Bitfoot provides real-time liquidity data, helping you avoid tokens with questionable liquidity setups.

  • Custom Alerts: Set up alerts for tokens with high buy/sell taxes, unlocked liquidity, or suspicious transaction patterns.

• Useful External Tools for Extra Precautions

  • TokenSniffer and Honeypot.is: These tools can check if a token has a honeypot feature (where you can buy but not sell) or other red flags.

  • Etherscan or Solscan: Manually check contracts for token distribution, locked liquidity, and transaction history.