Web3 Security Alert — High-risk Tokens
Overview
● High-risk tokens definition
● The four common types of high-risk tokens and their malicious mechanisms.
● The three layers of security measures implemented by Bitget to ensure the safety of token listings.
High-risk tokens refer to cryptocurrencies that are deliberately embedded with malicious mechanisms or hidden "backdoor" codes during their design and issuance. These are implemented by project teams with the intent to exploit investors at an opportune moment, enabling them to reap illicit gains through technical means. On the surface, these tokens may seem indistinguishable from regular ones, often featuring attractive marketing promotions, vibrant community engagement, and initial price surges. However, their smart contracts conceal dangerous mechanisms that can be activated at any time.
Common high-risk token types
Honeypot token: The "money-in, never-out" trap
The honeypot token is sometimes nicknamed the Pixiu token, after a mythical Chinese creature believed to attract wealth but never release it. The metaphor is apt: these tokens are a one-way street — easy to buy, nearly impossible to sell.
Imagine stumbling upon a "soon-to-moon" token and eagerly buying in early. Prices go up, and you're ready to take profits. But no matter what you do, every attempt to sell fails. All you can do is watch as your tokens turn into nothing more than worthless numbers on a screen. For example, the token GROKAI had a blacklist function embedded in its smart contract. The token's creator used it to block regular investors' addresses, preventing them from selling their tokens once the function was activated.
Inflationary scam tokens: The developer's personal money printer
Inflationary scam tokens function like a nonstop "money printer" for the project team. On the surface, these projects often promote attractive claims such as a "fixed supply" or being "non-inflationary." In reality, however, there are hidden backdoors embedded in the smart contract.
To the investor, everything appears to be running smoothly: the token supply seems fixed, trading is active, and the price is steadily climbing. Then, at a critical moment, the development team suddenly activates the hidden backdoor, minting a massive number of new tokens. As these tokens are rapidly dumped onto the market, prices crash suddenly, and investors see the value of their holdings wiped out in an instant. For example, the YFII fork project YYFI enabled excessive token minting, crashing the market before the team exited with huge profits.
Liquidity rug-pull tokens: Modern-day exit scams
The project team first creates a liquidity pool on decentralized exchanges (such as Uniswap or PancakeSwap) and pairs its token with mainstream assets such as ETH or USDT to establish an initial trading environment.
As hype builds and investors flood in, the token price rises steadily. Once the pool holds a substantial amount of real assets (ETH, USDT, etc.), the team suddenly removes all liquidity without warning. This is like draining a pond, leaving the fish (investors) stranded without water. Without liquidity support, the token's value can collapse almost instantly, often leaving investors with no chance to sell their holdings and cut losses. For example, in 2021, AnubisDAO amassed nearly $60 million worth of ETH in liquidity on Uniswap. Within 24 hours, the project team withdrew all liquidity, causing the token's value to plummet to zero and leaving investors with heavy losses.
Premature unlock scams: Fake lockups, real damage
Premature unlock scams are a more subtle form of fraud. Most legitimate projects implement token lockup mechanisms to prevent early investors and team members from selling large quantities too soon, thereby helping to maintain price stability.
However, in shady projects, these lockups are often fake. Hidden backdoors in the smart contracts allow insiders to bypass the lock and unlock tokens prematurely. When the price reaches a favorable level, the team dumps tokens that were supposed to be locked, causing the price to crash and leaving regular investors holding the bag.
Bitget's security measures
In-depth token due diligence: Going beyond the surface
At Bitget, we are not easily swayed by flashy marketing or glossy whitepapers. Every token seeking to be listed on our platform is put under our "security microscope" — a comprehensive and rigorous multi-dimensional evaluation system. Our security experts conduct thorough investigations from multiple angles, including:
● Project background checks: We dig deep to verify the origins, professional qualifications, and track records of the token project team.
● Comprehensive tokenomics analysis: A sustainable token requires a healthy tokenomics model. We assess its inflation mechanisms, incentive structures, and long-term viability.
● Valuation and distribution review: We rigorously evaluate the token's Fully Diluted Valuation (FDV) to ensure it aligns with the project's current development stage and market standing.
● Community health assessment: Projects of real value have active and diverse communities. We analyze the distribution of token holders and assess community engagement and participation levels.
Dual-layer security audits: Two lines of defense
At Bitget, we recognize that smart contract security is paramount to safeguarding digital assets. That's why we have established a dual-layer audit system:
● Professional internal audit: Bitget has a team of experienced blockchain security engineers skilled at identifying smart contract vulnerabilities and attack vectors. Each contract's code is reviewed line by line by our experts to detect potential security risks.
● External audit: Each token contract is also independently audited by leading third-party blockchain security firms with whom we have long-standing partnerships. Their expertise helps uncover even the most hidden threats.
This dual-layer approach ensures that if one layer overlooks a security issue, the other can detect and resolve it, giving users the strongest possible security assurance.
Real-time on-chain monitoring: A tireless digital guardian
Listing a token is not the end. It's the beginning of continuous security monitoring. Bitget's proprietary on-chain monitoring system acts as a tireless digital guardian, protecting user assets around the clock:
● Real-time anomaly detection: Our system continuously monitors all on-chain transactions and analyzes contract interactions in real time. Unusually large transfers, suspicious contract calls, and permission changes are promptly detected.
● Constant evolution: The monitoring system is designed to learn and adapt. It continuously updates its threat models and detection rules to stay responsive to emerging threats.
Best practices for users
Do your research and thoroughly understand the project
Investing in digital assets is like exploring uncharted territories. Thorough research is your most reliable compass. Before putting any money into a project, make sure you've conducted a deep investigation:
● Research the project team: Don't take polished bios or sleek headshots at face value. Dig into the true identities of core team members and verify the accuracy of their claimed experience. Trace their footprint in the blockchain industry and pay close attention to the outcomes of any previous projects they've been involved in.
● Understand the tokenomics: Carefully examine the token's total supply, circulating supply, and the ratio between the two. Review its unlock schedule, and evaluate the token's utility and growth mechanisms to ensure it's more than just a speculative asset with no practical use.
Pay attention to smart contract security
A project's smart contract code is a critical area that deserves close attention.
● Check for open-source contracts: Use blockchain explorers like Etherscan or BSCScan to verify whether the smart contract is fully open-source. Avoid projects that don't make their code publicly available.
● Use security analysis tools: Leverage specialized token analysis tools such as Token Sniffer or Go+ to scan the contract for vulnerabilities. These tools can automatically detect common risks like unlimited minting access, hidden fees, suspicious permission settings, and other red flags.
● Look for credible audit reports: Prioritize projects that have been audited by reputable third-party security firms.
Invest rationally
In the tempting and volatile world of digital assets, rational thinking may be the rarest and most valuable asset. Investors should always align their strategies with their personal circumstances:
● Assess your risk tolerance: Your crypto investments should never compromise your quality of life or mental well-being.
● Diversify strategically: Don't put all your eggs in one basket. Spread your investments across different project types, development stages, and blockchain ecosystems to reduce risk.
● Emotional discipline: While short-term market movements are often driven by emotion, long-term value depends on a project's real-world progress. Learn to manage FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt), and stick to a research-driven, long-term investment approach grounded in fundamentals.
By following these best practices, you'll not only invest more safely but also grow wiser in the process. In the world of blockchain, smart investors don't just chase returns. They balance financial growth with knowledge and sound risk management.
Final thoughts
As blockchain technology and the crypto market continue to evolve, the importance of digital asset security has never been greater. In this dynamic landscape of opportunity and risk, Bitget remains steadfast in its commitment to safeguarding user assets, continuously strengthening our comprehensive protection systems to ensure a safer trading experience for all.
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Web3 Security Alert - High-risk Tokens
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