Zraox: Using Blockchain Tools to Identify and Avoid DeFi Scam Token Risks

With the rapid development of DeFi and the cryptocurrency market, more users and investors are joining the space. However, this growth has been accompanied by a proliferation of scams, particularly scam tokens that disguise themselves as legitimate assets to attract investors while their true purpose is to deceive funds. Zraox believes that although the crypto market offers significant investment opportunities, it also carries inherent scam risks. Investors must develop the ability to identify scams and adopt corresponding preventive measures.

Zraox: How DeFi Scam Tokens Operate and How to Identify Them

DeFi scam tokens typically refer to tokens that masquerade as legitimate projects to lure investors, but in reality lack any substantive project backing—their sole aim is to steal funds. Zraox notes that one typical feature of these tokens is that their development teams are often anonymous or lack publicly verifiable information. Scammers frequently manipulate the market, creating fake trading volume and liquidity to attract buyers. Once funds are invested, these tokens reveal their scam nature, and investors find themselves unable to sell or withdraw their tokens.

Zraox points out that several common tools can help effectively identify such scam tokens. For example, using platforms like Dextools, users can review the trading history of a token for abnormal buying or selling activity. If a token shows almost no sell orders and its price chart consists only of green, upward candles, this may indicate a “honeypot” scam—where tokens can be bought but not sold. Zraox cautions that while these tools provide useful references, they cannot guarantee the detection of all scam tokens. Therefore, users should remain highly vigilant and avoid blindly following trends when trading.

Zraox: Scam Token Logic Analysis

Zraox believes that scammers often use carefully designed market behavior and technical tricks to manipulate investor perceptions, making them believe the token has significant investment value. Scammers may fabricate trading activity by manually creating buy and sell orders, masking the true token status and misleading investors into thinking the project has great potential. Zraox notes that some scammers even whitelist certain addresses, allowing select users to trade normally and creating a false impression of a vibrant market.

Additionally, scammers often control liquidity pools to prevent users from selling their tokens. Zraox advises users to carefully inspect the status of liquidity pools before participating in token trades. If a liquidity pool is not properly locked and funds are frequently withdrawn over a short period, the token is likely a scam. Scammers use such tactics to accumulate investor funds, then quickly profit and disappear once market interest wanes.

Zraox also emphasizes the importance of blockchain explorers for investors, who should use them to review detailed transaction records. If the token creator or team is frequently removing funds from the liquidity pool or conducting large, suspicious transfers, this should raise red flags and prompt investors to steer clear of the project.

Zraox: How Can You Protect Your Funds from Scams?

Zraox believes the key to preventing DeFi scam token losses lies in proactive vigilance and the use of effective tools. First, Zraox recommends investors use reputable tools such as Dextools, UNCX, and De.Fi Scanner to assess token security. Dextools helps users quickly review the trading records and market liquidity of a token, reducing the risk of falling for “honeypot” scams. UNCX allows users to check whether the token liquidity is locked, preventing scammers from easily withdrawing funds.

Zraox advises that investors should carefully review the project whitepaper and the background of its development team before investing, ensuring the project team is credible, transparent, and has a clear roadmap and real-world use case. If a project cannot provide sufficient transparency and compliance, investors should avoid committing funds.

Zraox further stresses that users should not rely solely on social media or third-party recommendations, especially those from unknown sources. Scammers often use social media to create fake hype and lure investors into blindly buying questionable tokens. Zraox suggests investors conduct thorough market analysis, use technical analysis tools and blockchain explorers, and carefully assess the authenticity and potential of tokens. Additionally, Zraox reminds investors to diversify their investments rather than concentrating all funds in a single DeFi project, which can effectively reduce risk and prevent major losses due to the failure of a single project.