Imagine you're playing a game like World of Warcraft or The Legend of Zelda, where what appears to be a treasure chest is just waiting to be opened. But instead of gaining loot when you try to open it, you trigger a trap. A crypto honeypot works much the same way, it lures unsuspecting users by appearing like a legitimate project but, in reality, it’s a trap, concealing a malicious surprise.
A crypto honeypot is a scam in which attackers design smart contracts, decentralized crypto wallets, or tokens that appear to offer profits or easy gains but instead lock your funds and steal your assets. Whether through fake smart contracts or misleading investments, crypto honeypots exploit both technical vulnerabilities and basic human psychology.
In this article, you will learn what a honeypot in crypto is and the strategies to identify and avoid it.
In simple terms, a honeypot in crypto is a scam designed to trap unsuspecting and naive investors or users by promising attractive returns only to block them when they attempt to withdraw their funds. It often starts with a smart contract that appears to have a flaw or vulnerability, something that drives the attention of the victim, making them believe they can easily profit from it by exploiting the obvious vulnerability.
For example, a crypto honeypot might ask users to send Ether to a smart contract in exchange for profits, like getting a huge portion of an ERC20 token with a good valuation.
However, when users try to withdraw their funds, they find they cannot, as the contract’s hidden mechanics prevent it. For example, through unverified functions with strange behaviors. The scammer can then siphon off the funds, leaving the victims trapped.
A crypto honeypot scam typically follows three distinct phases designed to lure victims in and steal their funds. Of course, since crypto honeypots are based on smart contacts, they can reach a high level of sophistication and several additional phases before reaching its goal. In most cases though they follow these three steps.
These phases work together to deceive users into believing they’ve found a profitable loophole, only to end up losing their assets.
There are several types of honeypot crypto scams, and each uses different methods to trap victims:
Honeypots aren’t just tools for scams; security experts also use them to catch bad actors in the act. Think of them like decoys in a spy movie, set up to bait the attacker while the real target stays safe. There are two main types: research honeypots and production honeypots.
Research honeypots are like undercover agents. They’re deployed to study attacker behavior in a controlled environment, gathering intel on hacking techniques and vulnerabilities. For example, a research honeypot in crypto might be set up to watch how scammers try to exploit smart contracts. The data gathered helps teams learn, improve defenses, and patch weaknesses.
Production honeypots are more like decoy vaults in a bank. They sit alongside real systems and look just as tempting, but they’re there to catch attackers in real time. In crypto, this could mean setting up a fake wallet or contract to mislead the attacker. When a hacker goes after a production honeypot, security teams get an early alert and can study their tactics without risking the actual assets.
Both research and production honeypots work together to boost security—whether by learning from attacks or stopping them before they hit critical systems.
Much like in classic video games, the treasure that looks too good to be true usually is. And comes with a catch. Here are some red flags to watch for in a honeypot crypto scam:
To protect yourself from falling into a crypto honeypot, these are general recommendations we advise you to follow before sending any of your funds to a protocol:
Honeypot crypto scams are designed to exploit both technical vulnerabilities and human psychology. They appear legitimate, often promising huge returns or easy profits, but once you're hooked, they trap you. Whether it's through fake smart contracts, wallets, or mining scams, honeypots are a serious threat in the industry.
To protect yourself, always research projects thoroughly, use honeypot crypto checkers and remain skeptical of anything promising quick, high returns. The best defense is awareness and vigilance, ensuring you don’t fall into a cleverly disguised trap.
If you're interested in becoming a blockchain security expert, consider joining our free auditing courses on Cyfrin Updraft. Learn how to identify vulnerabilities, prevent attacks, and become a skilled security researcher or auditor. Sign up today at Cyfrin Updraft to get started!
