Token Sniffer is one of the best tools to identify potential scam tokens, as different vile schemes are spreading across the DeFi space to dispossess people of their money. This is why upholding the safe trading of tokens on the DeFi is a matter of necessity.
Decentralised finance (DeFi) is a financial application that uses blockchain to eliminate financial intermediaries in the transaction process.
Blockchain is the bedrock of DeFi as it underpins Bitcoin itself. It enables many parties to maintain a copy of a transaction history, preventing a single, centralised source from controlling it. This is significant because centralised systems may restrict the sophistication and transaction speed while reducing users’ direct control over their funds.
The broadening of blockchain applications highlights DeFi as the best model for direct asset transfer to more complex financial use cases.
However, there have been several cases of scam tokens bedevilling the DeFi space, with people falling victim at intervals. This harps that it is sometimes difficult to spot scam tokens in Defi as scammers use sophisticated and complex schemes to rip people off their funds.
In curbing this evil act, tools like Token Sniffer, dextools, unicrypt, a block developer, BSC check, etc., have been put in place to prevent further scam token that culminates in the loss of funds. But in this article, we will introduce a token sniffer to identify scam tokens.
Overview Of The Current DeFi Ecosystem
DeFi enables you to swap assets, borrow money, make investments, and more. You can also buy insurance and trade derivatives. However, it moves more quickly and excludes paperwork and a third party. Like most forms of crypto, DeFi is available to everyone, peer-to-peer (P2P), decentralised, global, and pseudonymous.
It is noteworthy that blockchain technology is the foundation of the DeFi ecosystem; as such, it has two major characteristics, which are:
- Primarily automated and tamper-proof
- Compatible with cryptocurrencies
Today, the DeFi ecosystem is open, permissionless, and ultimately a new financial system that is internet-based and composed of several dApps. So the emergence of DeFi space for cryptocurrencies to thrive on has lately been breeding different scams that the ecosystem is grappling with. What are these scams?
Types Of Scams In The DeFi Space
1. Rug Pull
The rug pull can also be known as “pump-and-dump.” This is a scheme mostly peculiar to the altcoin crypto market. This works because the bulk of a given coin’s supply is held by one or a small group of investors or creators. Then they start generating buzz and pushing that coin. To create demand and boost sales, they use social media platforms like Instagram, Facebook, Twitter, Telegram, etc., to make their agenda.
They exaggerate the innovative applications of a coin, its extreme popularity, and even celebrity endorsements to boost sales. The pump then takes place when upon the price increase of the cryptocurrency, which tempts prospective investors to fall for it and buy into the hype. But this further leads to a dump when the scammers liquidate all of their coin holdings when that occurs. Price falls as a result of the sell-off, sometimes within minutes.
2. Wallet Dusting
This type of fraud is exceptionally cunning and subtle. If you trade altcoins, you probably have a few digital wallets like MetaMask or Trust Wallet. Because they are cloud-based and connect directly to exchange systems, these are referred to as “hot” wallets. However, central exchange platform wallets are also prone to attack.
Fraudsters will place a tiny quantity of an illegible coin into your hot wallet as part of a dusting scam. You’re not the only one, though. The majority of dusting assaults use tens of thousands of anonymous wallets. Dusting assaults are used by con artists to locate victims who own a lot of cryptocurrencies.
Phishing is a devious social engineering assault that seeks to con you into disclosing sensitive information, including usernames, passwords, credit card numbers, and even social insurance numbers. Any information that enables them to pose as you or access your cryptocurrency accounts would be sought after.
The most common phishing scams encourage you to click on a dangerous link to confirm your account or send you to phoney websites, for example. They desire your login details. Because they are simple to use and highly efficient, phishing schemes are typical in the cryptocurrency world.
Consequently, the significant impact of these scams on DeFi users is the loss of funds which can take a destructive toll on people. The loss of funds can have a ripple effect of possible depression and massive debt that could cut off people’s livelihoods. This is why it is best to have a handy knowledge of how to spot these scams and try to avoid them.
What Is Token Sniffer?
Token Sniffer is a simple tool that you can use to have an overview of different tokens on both the Ethereum network and the Binance Chain. You can use this tool to get information about exploits, a quick contract audit, and more by just pasting the token contract address into the search bar.
Most importantly, you can use Token Sniffer to fast-check the authenticity of tokens on the list of scams and hacks.
Features Of Token Sniffer
As this tool is on the mission of making decentralised exchange trading safer from malicious contact and preventing scams, some of the metrics on the Token Sniffer website are top-scoring tokens, trending tokens, the newest tokens, and the latest scams and hacks.
Some of the features of Token Sniffer are:
- It supports different DeFi platforms, which include Ethereum, Polygon, Binance Smart Chain, Fantom, etc.
- You can search for any token on the official site.
- You can find the result of the audit of any token on the DeFi space.
- The audit informs you of the swap analysis, token risk, liquidity analysis, holder analysis, contract analysis, and token summary.
How To Use Token Sniffer To Identify Scam Tokens
You can easily use Token Sniffer to spot a scam token on DeFi platforms using the following steps:
1. Visit Token Sniffer’s official website.
2. Check the token on the DeFi platform and copy the token’s address.
3. Paste the copied token onto the search bar of the website.
4. You will see the result of the analysis of the token. This includes swap analysis, risk factors, etc.
5. Check the risk factor as Sniffer Token’s audit system assesses the token.
6. High-Risk assessment means that the token is a potential scam token with the advice of not trading in it.
6. Low-Risk assessment translates to the token’s authenticity so that you can trade in it.
7. Your check is complete, as you know if the token is a scam.
For instance, you can visit the Token Sniffer website if you are a newbie to FoxSwap tokens and want to check quickly to ascertain how safe trading in FoxSwap is. Look for the FoxSwap token, possibly on the “Newest Token” tab and copy and paste its address to run a risk factor assessment.
When the risk factor assessment shows a high-risk result, this is a red flag for you to avoid trading in FoxSwap because it is a potential scam token, but if the result is low-risk, then it is a green light for you to proceed with trading in FoxSwap token.
Benefits Of Using Token Sniffer
1. Token Sniffer enables you to enter a token’s name and address while giving you its audit results.
2. You can see the contract code and generate a bubble map that gives you the address of the creator and the address of the top 100 holders of the token, with the percentage of what they hold.
3. Token Sniffer enables you to see any burn address, which the wallet developers use to store coins and withdraw them from circulation.
DeFi scam tokens are prevalent in the crypto market, and first-hand information on identifying and avoiding them is essential. Token Sniffer has been designed to address this issue by flagging potential scam tokens to dissuade people from trading them.
Therefore, it is essential to protect yourself from scams by researching and seeking answers about the token you want to invest in. The first and best way to go is to fast assess the risk factor of the token on Token Sniffer.
Token Sniffer Frequently Asked Questions (FAQs)
1. How Reliable Is Using Token Sniffer?
Token Sniffer is considered one of the best tools to identify scam tokens, so you achieve the best result using the DeFi tool.
2. Does Token Sniffer Charge A Fee To Use The Tool?
No, you can use the Token Sniffer at no cost.