8 Ways to Check if a Token is a Scam
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8 Ways to Check if a Token is a Scam
including block explorer verification, checking pool liquidity, and listed exchanges.
Navigating Web3 tides with focused insightsAuthor: Darius Devėnas, DappRadar
Translation: Felix, PANews
The blockchain industry is full of promises of fast and easy money. It's crucial to identify which projects are safe and which are destined to fail within three months. This article outlines eight methods to help traders avoid outright scams.
1. Start with the basics
To verify a token’s legitimacy, begin with the most accessible methods—such as Google searches and Twitter. Research the token and its team, look for red flags or warning signs, and seek reliable sources like official websites, news articles, and verified social media accounts.
Check for social media red flags
A verified X (formerly Twitter) account can often help confirm a project’s legitimacy. Additionally, participate in discussions about the token to understand community sentiment and opinions.
Be cautious of projects that have large follower counts on social media but low engagement. Automated comments from fake accounts should also raise concerns. If every comment says “This is a great project” or “Moon incoming,” take note.
Search the token address on Google
If an internet search fails to reveal a clear homepage, whitepaper, or obvious use case for the token, it’s likely a scam. When searching for a token address, you should easily find links to a block explorer, official website, and whitepaper. If not, treat this as a red flag.
Also note that Google ads are often a haven for scam websites. Never click on ads at the top of Google search results. Always ensure you’re visiting the official website and avoid clicking Wallet Drainers (malicious scripts targeting crypto wallets that steal assets) or other hacking software.
2. Verify the code on Etherscan
Access the block explorer of your chosen chain and check whether the source code has been verified. For example, on Etherscan (Ethereum’s block explorer), it should look like the image below. The contract shown here hasn’t been verified—an obvious warning sign. If the code isn’t verified, you might be dealing with a scam.
Why don't scammers just verify their code?
Because once the contract’s source code is public, anyone can see what the contract truly does—whether it has absurd tokenomics or a hidden function allowing developers to steal all your tokens. But does this mean every unverified contract is a scam? Not necessarily—but it’s a serious red flag.
3. Check the Etherscan comments section
This step is simple—most block explorers have a comment section. Often there are no comments, but if a project is a scam, you may find a group of angry users complaining. Always check these comments. If someone says it’s a scam, it’s 99% likely to be one. If you’ve been a victim, leave a comment too.
4. Check the DappRadar blacklist
You can cross-reference DappRadar’s token blacklist hosted on GitHub. If a token address appears on the list, it’s a scam.
5. Check token details in token indexes
If you can’t find the token on CoinGecko, DappRadar’s token index, or similar price-tracking platforms, it’s likely a scam. Proceed with caution if you see a warning like the one below:
All legitimate tokens share their information with token index sites for verification. However, platforms like CoinMarketCap and CoinGecko require certain conditions to be met. Therefore, not all tokens—legitimate or otherwise—are automatically listed on these indexes.
6. Check how many exchanges list the token
If a token is only traded on a few decentralized exchanges (DEXs), it could be a scam. Listing on centralized exchanges (CEXs) requires KYC and additional trust—the larger the exchange, the better the reputation of the listed token.
However, not all tokens listed exclusively on DEXs are scams. Some projects don’t require high trading volume, and some cater specifically to Web3 users rather than traders.
Nevertheless, tokens listed only on DEXs represent higher-risk investments—you're more likely to encounter scams. The image below shows a token used only on DEXs (left) versus one available on multiple CEXs (right).
7. Check liquidity in the token’s reserve pool
Before investing in a token, check overall demand and liquidity availability. Checking a token’s liquidity on platforms like Uniswap V2 or other DEXs is straightforward.
Liquidity refers to the amount of cryptocurrency or tokens locked in a smart contract, enabling users to buy and sell assets via (decentralized) exchanges. If liquidity is below $100,000 or drops rapidly, you might be dealing with a scam.
When using a DEX, always check basic on-chain metrics such as:
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Trading volume
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Number of trades
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Number of unique active wallets interacting with the smart contract—users connecting via Web3 wallets to the DEX.
If any of these metrics seem unusual, conduct further research.
8. Use third-party analysis tools
Here are some useful token analysis tools:
Smell Test: Automatically audits tokens. Scored out of 100, lower scores indicate a higher likelihood of being a scam.
Honeypot: A honeypot is a smart contract with intentional programming flaws designed to lure attackers. Once exploited, hidden code activates to retaliate. Regardless of your intent, avoid honeypots.
DEXtools: Tracks real-time token prices and helps assess a token’s true value in real time.
Scammers exist both on the blockchain and in the real world. Following these tips should help you avoid fraudulent tokens designed solely to steal funds.
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