A honeypot is a token designed so that people can buy it but can't sell it, or can only sell at a crippling loss. The chart often looks great, because nobody is able to sell.
How honeypots work on EVM chains
On Ethereum-compatible chains such as Robinhood Chain, token contracts can include logic that does the following.
- Blocks transfers from anyone not on an allow-list.
- Applies a sell tax that can be raised to 100%.
- Blacklists wallets after they buy.
- Limits the maximum amount any wallet can sell.
How to check
- Run the token through a honeypot simulator, which tries a test buy and sell.
- Read the contract (it should be verified on the block explorer) for owner-only functions that change taxes, pause trading or blacklist addresses.
- Check whether the owner has renounced control. Renouncing isn't a guarantee, but it removes many risks.
- Look for any real sells. Plenty of buys and no successful sells is a major red flag.
Amplified's Token Check includes a honeypot and permissions check as part of its baseline.
Educational content only. Not financial advice.