Performing thorough checks to minimize risks before investing in crypto tokens is crucial. Follow this step-by-step guide to understand the key factors you should evaluate.
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By following this checklist, you can make more informed decisions and reduce the risks of buying any crypto token. We will explain how our advanced filtering can help you in any step of the journey. The checks are divided into three categories:
MUST (Essential Checks): These are non-negotiable checks that every investor should perform before buying any crypto token.
SHOULD (Recommended Checks): These checks add another layer of security and insight. You could skip these steps if you understand what you are doing and the reason behind it.
COULD (Additional Checks): These evaluations can give you deeper insights but are not always necessary. But they can help you find a project that will give you a better result in the long run.
A smart contract is the backbone of any crypto token, dictating how the token operates on the blockchain. For a project to be considered trustworthy, its smart contract code should be open-source and publicly available for review. It would be best never to buy a token for which the code is not verified. In such a way, a scammer could easily insert a vulnerability in the contract without anyone knowing until using it.
How to check it:
Use our Is Contract Verified filter and set it to True.
Go to the Block Explorer token page, search the Contract Tab, and look for the green checkmark and the ✅ Contract Source Code Verified text.
A honeypot is a deceptive smart contract designed to attract investors but prevents them from selling their tokens, effectively trapping their funds. This scam can be identified by analyzing the smart contract code or using specialized tools that simulate buy and sell transactions.
Our advanced filtering tries to remove any honeypots from the filter results automatically.
But always double-check it on a honeypot checker page like:
Some tokens implement taxes on buying and selling to fund various project activities such as development, marketing, or rewards to holders. However, excessive taxes can be a red flag, as they could indicate an unsustainable project model or exploitative intentions. A reasonable tax rate is generally below 10%, allowing you to participate in the project without losing a significant portion of your investment.
Use our Sell Tax and Buy Tax filters to limit a tax for a project you search for.
Renouncing a smart contract means the creator will no longer control it, making it trustless and transparent. This gives investors a sense of security, knowing that their investment is secure and not subject to manipulation by the contract creator. One of the main benefits of renouncing smart contracts is increased security. It is also important to note that scammers will put code into contracts that allow them to perform certain actions even when the contract is renounced!
Reasons Why Ownership Renouncement is Not a "MUST":
Flexibility for Upgrades and Improvements
Transparent and Trusted Teams
Security and Emergency Response
When Ownership Renouncement Becomes More Critical:
Anonymous Teams
No Need for Future Upgrades
High-Risk Tokens (especially new meme tokens without doxed teams and any utility)
How to check it:
Use our Ownership Renounced filter and set it to True.
Under the token security tab, check for the contract Remounced field.
Ensure that a reputable security firm has audited the token’s smart contract.
Audits are comprehensive evaluations conducted by independent third-party firms to scrutinize a project’s smart contract code and overall security practices. These evaluations aim to identify potential vulnerabilities, bugs, or malicious code that could pose a risk to investors.
ⓘ We don't currently support filtering if a project has done an audit, but the feature is planned for the future.
Importance of Community Strength: Community strength is one of the most critical factors in the success of any crypto project. A vibrant, engaged, supportive community can drive token adoption, create hype, and sustain rallies even in challenging market conditions. Assessing community strength requires diving into their Telegram or Discord and gauging Twitter engagement.
What to Look For:
Genuine Interactions: Beware of channels with artificially inflated member counts. Look for genuine interactions rather than memes, spam, or repetitive price hype. Bots and fake accounts can easily inflate the numbers without adding real value.
Quality of Discussions
Number of Active Users
Organic Growth
Assessing community strength requires more than just examining the number of followers on social media platforms; it involves examining the core of the community’s engagement, sentiment, and activity.
What to Look For:
Engagement Over Followers: A large follower count doesn’t necessarily mean a strong community. Focus on engagement metrics such as likes, retweets, comments, and quote tweets. Consistent, high engagement indicates active interest and support.
Quality of Engagement
Frequency of Discussions
Active Participation in Events and AMAs
Engagement with Official Updates
A strong and satisfied community is one of the clearest indicators of a project's health and potential for long-term success.
What to Look For:
Support for New Members
High Level of Participation
Positive and Constructive Dialogue
Community-Led Content: Check if the community is creating content such as fan art, memes, analysis threads, or sharing personal stories related to the project. Organic content generation is a strong indicator of community strength and enthusiasm.
Influencer Participation: Look for known crypto influencers or respected figures engaging with the project’s posts. Influencer involvement often brings additional credibility and helps amplify the project’s reach.
Sentiment Analysis: Use sentiment analysis tools to gauge overall community sentiment on social media platforms. This can help you assess whether the general mood is optimistic, neutral, or negative.
Active and responsive community moderators are key in maintaining a positive, organized, and informed environment within the project’s communication channels (e.g., Telegram, Discord, Reddit). Moderators often bridge the project’s team and its community, providing essential updates, answering questions, and resolving issues. This check ensures proper oversight and guidance in the community, significantly enhancing trust and engagement.
What to Look For:
Availability and Responsiveness
Transparency and Clarity
Proactive Engagement
Conflict and FUD Management
Open communication between the project team and the community is critical to building trust, transparency, and long-term engagement. Open lines of communication mean that the project’s developers and leaders consistently provide updates, address concerns, and share their plans with the community. This transparency reassures investors and community members that they are informed and can make decisions based on accurate and up-to-date information.
What to Look For:
Regular Updates
Direct Access to the Team
Timely Responses to Concerns
Openness During AMAs and Public Events
Roadmap and Vision Updates
Clear Communication Channels
Evaluating the ethics of a project’s marketing practices is an additional step to help you identify whether the project is genuinely focused on long-term success or simply trying to pump its token price through hype and misleading tactics. Ethical marketing involves honest communication, transparent advertising, and the absence of deceptive or manipulative strategies to exploit investors' emotions, such as fear of missing out (FOMO). While this check is not mandatory, it can provide deeper insights into the project’s integrity and potential for sustained growth.
What to Look For:
Honest and Transparent Messaging
Avoiding FOMO-Driven (Fear of Missing Out) Tactics: Phrases like “Get in before it’s too late!” or “Don’t miss out on 100x gains!” are red flags.
Transparency About Partnerships and Endorsements
Engagement vs. Hype: Ethical projects focus on genuine community engagement rather than creating artificial hype.
Legitimate Advertising Channels
Educational Marketing
It is crucial to verify whether the token has regular selling activity. If a token has little to no selling, it could be a sign of a “honeypot” scam, where the contract only allows buying but prevents selling, trapping investors' funds. Even if a token shows sell transactions, it could still be part of a honeypot scam if the selling activity is limited to specific "whitelisted" addresses. In such scams, only certain addresses (typically those controlled by the scammers) are allowed to sell the token, while other investors cannot. This gives the illusion of normal market activity but traps the funds of unsuspecting investors.
A healthy balance of unique buyers and sellers indicates genuine interest and participation in the market. If only a small number of addresses are responsible for most transactions, it could signal manipulation or the involvement of bots, leading to a highly unstable market.
The concrete minimal number is hard to define, but tokens with less than 100 unique addresses should be avoided for users who are not experienced in what they are doing.
A healthy token usually has thousands of unique buyers and sellers. Also, check for strange patterns, like a token having more than a million buyers and just a thousand sellers. This can be a sign of something being wrong.
