Seven checks on liquidity, holders, contract permissions and Solana authorities, and what they can’t tell you.
New tokens launch every minute, and the easiest way to lose money on them isn’t a market crash. It’s a rug pull.
A rug pull is an exit scam. Creators launch a token, attract buyers and liquidity, then drain the pool or dump their own holdings and disappear. It can happen fast. In 2021, AnubisDAO raised close to $60 million almost overnight with no website, no white paper and anonymous developers. The funds left its liquidity pool about 20 hours later (per Chainalysis, as reported by The Register).
Every check below comes down to three questions: Who controls the liquidity? Who holds the supply? What does the code let the creator do?
The three common types
Hard rug: creators remove the liquidity pool and the price falls close to zero.
Soft rug: insiders quietly sell a large allocation over time.
Honeypot: the contract lets you buy but blocks you from selling.
The 7 checks
1. Is the liquidity locked?
Open the token on DEX Screener and see how much liquidity exists, who controls it, whether it’s locked, and when the lock expires. Check that the lock covers a meaningful share of the pool and that no other pools stay under insider control. An unlocked or very short lock is a warning sign, but a lock alone doesn’t make a token safe.
2. Who holds the supply?
Paste the contract address into Etherscan, BscScan or Solscan and open the holders tab. Ignore exchanges, liquidity pools, bridges and burn addresses, then ask who controls the supply that can actually be sold. If a few wallets that look team-connected hold most of it, one sale can crash the price.
3. What can the contract do? (EVM chains)
Scanners like Token Sniffer, Honeypot.is and GoPlus can flag risky settings. Look for minting, blacklisting or freezing wallets, unusual buy/sell restrictions, a sell tax that can change after launch, and broad owner privileges held by a single wallet. Also confirm the source code is verified on the explorer.
4. Mint and freeze authority (Solana)
Mint authority lets its holder create new tokens. Freeze authority lets its holder lock individual token accounts so they can’t transfer. A mint authority set to null is permanently revoked, while a retained freeze authority can be used to build a honeypot. Check the Authority tab in a Solana explorer. Stablecoin issuers keep these powers for legitimate reasons, so context matters.
5. Test for honeypots and hidden taxes
Run the contract through a honeypot checker, compare buy and sell tax, and confirm the fees can’t be changed later. A tiny test buy and sell can expose an obvious block, but it can’t reveal a rug that happens weeks later.
6. Research the team, audit and history
An anonymous team with no audit leaves nobody accountable. If an audit is claimed, find the report on the auditor’s own site instead of trusting a badge. Anonymity alone doesn’t prove a scam, and an audit alone doesn’t prove safety.
7. Watch for hype and pressure
Urgency, promises of big returns and loud promotion with no working product are manipulation tactics, not evidence of quality. And never share your recovery phrase with anyone, including people who offer to “verify” your wallet.
How common is this?
Solidus Labs found that roughly 93% of 388,000 Raydium pools showed signs of liquidity being pulled, with a median loss of about $2,832. Treat that carefully: it measures collapsed liquidity and withdrawal patterns, not court-proven fraud, and Solidus sells token-scanning tools. It shows how quickly most new tokens fail, not how many were crimes.
What these checks can’t tell you
A soft rug can unfold over months. Scanners can miss new tricks or flag harmless features. A token can pass every check and still lose value in an ordinary market drop. Use more than one tool, and treat disagreements between them as a warning.
The rule of thumb
One red flag calls for a closer look. Several together are a good reason to skip the token. Never put in more than you can afford to lose.
I’ve put the full guide, with a quick-reference checklist table and FAQs, on CST Times dot com:
Disclaimer: This article is for educational purposes only and is not financial, investment or legal advice. Crypto assets are volatile, and you can lose some or all of your money. Always do your own research.