What Is Honey pot?

In decentralised finance a honey pot describes a trading pair or a token designed to fool trading strategies. This is made possible by ERC-20 flexibility allowing it to have custom transfer and ownership rules, where the token owner and deployer manipulates balances.

The scams include “buy only” tokens, tokens with token tax or trading pools where the owner can drain quote token away. Usually trading algorithms are baited with “up only” price manipulation techniques and wash trading to believe that the trading pair is robust with good momentum and volume.

See also: term:token tax.