Crypto glossary
Honeypot token
A honeypot token is a scam token whose contract lets people buy it but blocks or heavily taxes selling, so buyers are trapped while the creator cashes out.
The trap is written into the token's smart contract. Common tricks include a hidden blacklist that adds every buyer, a sell tax that the owner can raise to 100%, transfer rules that only allow approved addresses to sell, or a pause function. On a chart the token looks healthy, because buys go through and the price keeps rising.
Honeypots are common among new memecoins on DEXs, where anyone can launch a token in minutes and early buyers chase fast gains. The creator sells into the liquidity provided by trapped buyers or pulls the liquidity outright, which makes the scheme a close relative of the rug pull.
Token security scanners simulate a buy and a sell and flag suspicious functions such as owner-controlled taxes, blacklists or minting rights. A contract that is unverified, recently deployed or still controlled by its owner deserves extra caution, and a token that nobody seems able to sell is a clear warning.
Example
A new token climbs 500% in an hour on a DEX; a buyer spends 2 ETH on it, then discovers that every sell transaction fails because the contract only lets the deployer's wallets sell.
