What is a Honeypot?
A honeypot in the context of cryptocurrency refers to a deceptive trap set by malicious actors to lure unsuspecting users into engaging with what appears to be a lucrative opportunity.
These traps are often designed to mimic legitimate crypto services, such as crypto wallets, exchanges, or even enticing investment schemes.
How Does a Honeypot Work?
Honeypot scams typically follow one of two deceptive strategies:
1. Malicious Smart Contracts
A scammer deploys a smart contract with a fake vulnerability, making it look like users can extract tokens.
To exploit this, users must first send funds—often a required deposit.
Once the transaction is made, a hidden mechanism prevents withdrawal.
The attacker later drains the contract, taking both their bait and the victim’s deposit.
2. Social Engineering via Wallets
A scammer poses as a beginner asking for help with a large wallet balance.
They offer access (including private keys) to someone who helps cover gas fees.
The wallet holds high-value tokens but lacks the native token to withdraw them.
Once the victim sends real crypto to cover gas, the scammer drains it instantly.
Both methods rely on deceiving the victim’s sense of opportunity or generosity—only to trap them once funds are sent.
How To Spot And Prevent Honeypot Scams?
Spotting a honeypot scam isn’t always easy, but here are key red flags to watch for:
Anyone sharing a seed phrase or Secret Recovery Phrase: No legitimate crypto user would ever share this. It’s an immediate red flag, unless it's for test environments.
Suspicious Transaction Patterns: On a block explorer, check the wallet's history. If funds are quickly transferred out after being deposited, it could indicate an automated script is draining funds.
Unsolicited DMs: Scammers often reach out via social media pretending to need help moving large sums of crypto. They may offer you access to a wallet full of tokens but require you to deposit native tokens (e.g. ETH, BNB) to cover gas fees. Once you do, your funds are gone.
Copy-paste Bot Activity: Be wary of identical messages or tweets being posted across multiple accounts. These are often bots spreading scams.
Above all, always Do Your Own Research (DYOR) before interacting with unknown contracts or wallets. If it looks too good to be true, it probably is.
