Token Safety Checklist: 10 Things to Check Before Buying Any Crypto

Before buying any cryptocurrency token — especially new or lesser-known ones — run through this checklist. Each point helps you identify potential scams, rug pulls, and high-risk tokens.

The 10-Point Token Safety Checklist

1. Is the contract source code verified?

Verified (open-source) contracts have their code published on the blockchain explorer (Etherscan, BSCScan, etc.). This lets anyone read exactly what the contract does. Unverified contracts are a major red flag — you have no way to know if the code contains hidden traps.

2. Is it a honeypot?

A honeypot lets you buy but not sell. Use a token scanner to check. If the scanner detects honeypot behavior, do not buy under any circumstances.

3. What are the buy and sell taxes?

Many tokens have transaction taxes that fund development or liquidity. Reasonable taxes are 0-5%. Taxes above 10% are suspicious. Taxes above 50% mean the token is almost certainly a scam. Also check if the owner can modify taxes — some contracts start with low taxes and increase them later.

4. Who owns the contract?

Check if ownership has been renounced (sent to a dead address). If not, the owner can potentially change the contract's behavior. Also verify that ownership can't be reclaimed after renouncing — some contracts have backdoors that let the creator take back control.

5. How much liquidity does it have?

Liquidity is the pool of funds that enables trading on DEXs. More liquidity means less price impact when you buy or sell. Tokens with less than $10,000 in liquidity are extremely risky — even small trades can crash the price, and the liquidity provider can remove it at any time (rug pull).

6. Is the liquidity locked?

Locked liquidity means the creator can't withdraw it for a set period. This prevents the most basic form of rug pull. Check if the liquidity pool tokens are sent to a timelock contract or burned.

7. How many holders are there?

A healthy token has hundreds or thousands of holders. If the top wallet holds more than 5-10% of the supply (excluding contract addresses and dead wallets), it creates a large sell-pressure risk.

8. Is the token a proxy contract?

Proxy contracts can have their underlying logic changed by the owner. This means the contract could behave normally today but be modified to become a honeypot or rug pull tomorrow. Not all proxy contracts are scams, but they add risk.

9. Can the token be minted?

Mintable tokens allow the creation of new tokens, which dilutes existing holders. Some legitimate projects need minting (for rewards or staking), but unlimited minting on a small-cap token is a warning sign.

10. Does the project have real utility?

Beyond the technical checks, ask: does this token do anything useful? Tokens with no real product, team, or use case are more likely to be pump-and-dump schemes. Check for a real website, active development, and a clear purpose.

Quick Scan

Don't have time to check all 10 points manually? CryptoSage's free token scanner checks most of these automatically and gives you a safety score from 0 to 100. Just paste the contract address and get results in seconds.