Sunday, April 4, 2021

Shitcoin Due Diligence

 I DID NOT WRITE THIS. Full credit goes to "issafouz" from the r/CryptoMoonshots Discord #shitcoin-due-diligence channel (yes, this is a real thing). Posting this out of an abundance of caution during this frothy, scammy bull cycle. Do Your Own Research (DYOR) and stay safe out there.

Shitcoin Due Diligence: How to spot a honeypot/rug.

First step: Always look at the contract before buying a shitcoin, people just ape in and lose a ton of money

What to look for in the contract:

There are various things to look for in these contracts, the quickest way to spot whats wrong is go on the contract link, and look at the code and press Ctrl+F, this will allow you to search for any specific lines of code saving you a ton of time

Mint Function: So the first thing I look for is whether the code has a mint function or not, this is by far the biggest red flag for me because the devs can literally make as much as supply as they want

Remove Liquidity: If the code doesn't have a mint function, that is  a good sign, next search for the remove liquidity function, if it does have this function, do not buy the token, essentially the devs can remove all liquidity causing the coin to crash

Allow: The next thing i search for is the allow function, this often determines whether or not you can sell the token, many devs can make a list, making those on the listr able to sell and no one else can, LordMau has gone more into depth on this right above so all credits to LordMau for this part

HoneyPot test: Buy a very small amount of the coin less than 1 cent, if you can sell it that means it isn't a honey pot, although this should be taken with a grain of salt, in the Hermes example people were able to sell some were not but Hermes was still a scam

Repetition of contracts: Another key characteristic that I aim to analyze is the repetition of contracts, I go on the block chain verified contracts, and you can look at then code for these new contracts, again in the hermes example, hermes code was copy and pasted and all i had to do was search through a few contracts to figure this out that many have the exact same thing

That's about all I know on how to spot a rug.

PS: I've learned all of this from personal experience so  I hope you guys find it valuable

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