The blockchain records everything — including fraud. Here are the most common on-chain scam patterns, how to identify them, and what to do when you spot one.
A rug pull is when a project's founders drain the liquidity pool and disappear with investor funds. On-chain, this leaves a very distinctive footprint. In the hours or days before the rug, you'll often see the developer wallet receiving large amounts of the project token and quietly selling into the liquidity pool. Then, in a single transaction, all remaining liquidity is removed.
Warning signs to look for: developer wallet with no prior history suddenly receives large token allocation, tokens flowing from the project treasury to an exchange address, unusually high sell pressure from founding wallets while marketing continues.
A honeypot is a token you can buy but not sell. The smart contract is coded with a hidden restriction that prevents selling — only the deployer can sell. Victims see the token price rising and buy in, but when they try to sell, the transaction fails. The deployer then sells, collapses the price, and disappears.
We covered this briefly in our phishing article, but it deserves more detail. Fake airdrops are tokens sent unsolicited to your wallet with names that include URLs or promises of rewards. The value shows up in your wallet, making you feel like you've received something. But attempting to sell or claim the "reward" triggers a malicious approval that drains your real assets.
The on-chain pattern is distinctive: one address sending the same token to thousands of wallets in a short period, with token metadata containing URLs or suspicious keywords.
Wash trading is the artificial inflation of trading volume to make a token appear more active and valuable than it is. On-chain, you'll see the same ETH cycling between a small number of addresses — address A sends to B, B sends to C, C sends back to A — creating the appearance of high volume with almost no real economic activity.
More sophisticated than an instant rug pull, the slow rug involves developers gradually selling their token allocation over weeks or months while continuing to develop and market the project. By the time the community notices the price decline, the founders have already exited their positions. Look for consistent selling from founding wallets even during periods of positive price action.
Always research a project's on-chain activity before investing. Check the deployer wallet's history — have they deployed and abandoned projects before? Look for concentrated token holdings — if 90% of the supply is held by a few wallets, the price can be manipulated easily. Use cryptoucan.xyz to quickly scan any address involved in a project before committing funds.
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