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DEX users trading new or unknown tokens are constantly at risk of losing funds due to a variety of scams perpetrated by the token issuer. As a result, theyâre obliged to be constantly alert to common types of token scam â as well as the ever more sophisticated models that are frequently introduced. To help protect users, Sushi has teamed up with GoPlus Security to make dodgy tokens easier to identify.
DEX Diligence as a Service
The permissionless design of blockchain means that anyone can launch a token and encode its smart contract with rules concerning the tokenâs behavior. Most of the time, these rules are benign, covering such matters as the token name, supply, and any mechanics governing its burning, liquidity, or tax. For instance, itâs relatively easy to create a token with a 5% sell tax that redistributes this fee to the liquidity pool to grow protocol liquidity.
But for every one legitimate token that launches on popular chains such as Base and Ethereum, there are a dozen honeypots in which the buyer is destined to lose all their money. This is where services such as GoPlus Security prove their worth, alerting users to the hidden risks that can lay cloaked in the token contract.
Sushi has integrated GoPlusâs Token Security API which provides token risk assessment, transaction security checks, and detailed token information. It helps end users identify tokens that present a higher risk of being scammed and to thereby avoid purchasing them.
Honeypots That Keep on Pumping
Scam tokens, commonly known as honeypots, typically present very attractive charts that look alluring to buyers. Everyone is enticed by an âup onlyâ chart and for many honeypots thatâs literally what happens because after buying the token, youâre unable to sell. This is because the smart contract only allows whitelisted addresses â i.e. those belonging to the contract creator â to sell.
But not all honeypot tokens fall into that bracket: others do allow selling, but are created using unusually deep liquidity to entice buyers into thinking theyâre purchasing the next 100x memecoin, only the liquidity isnât locked, allowing the contract creator to rugpull it at any time. Such honeypots can climb impressively high before the liquidity is suddenly pulled and everyone loses.
GoPlusSecurity is already widely used by EVM platforms to alert users to common scams. Itâs in place on popular DEX aggregator Dexscreener, for instance, where it helps users steer clear of a multitude of fraudulent projects. In addition to assessing basic token contract information such as whether the token is sellable, its API can determine whether the SC is open source, a proxy contract, mintable (i.e. the creator can issue more tokens), has a trading cooldown, blacklist, and much more.
Safety in a Sea of Sharks
Sushiâs decision to integrate GoPlus Securityâs token checker should help users steer clear of the majority of honeypots when interacting directly with the Sushi DEX. Its API will provide a warning message whenever the user interacts with a token that isnât in Sushiâs default list and will apply a risk rating to the token in question.
Valuable as this service is, traders considering buying new and unknown tokens should also conduct their own due diligence, searching for the token address on Twitter, checking the projectâs Twitter or Telegram to see if replies are allowed on posts, and checking what other crypto Twitter users have to say. Scammers are always gonna scam. Through Sushi and GoPlus Securityâs collaboration, DEX users have another weapon in their arsenal against scammers. The battle may not be over, but itâs a victory all the same.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.