Gem or Rug Pull? How to Identify High-Risk Tokens Before InvestingWe all see those tokens promising 100x gains overnight. While some are legitimate moonshots, many are high-risk traps designed to exploit FOMO. Distinguishing between a volatile opportunity and a guaranteed loss is the most important skill a trader can learn.
Here is a guide on Cwallet, Learn that breaks down the anatomy of these high-risk assets. Here is a summary of the red flags you need to watch for:
What Makes a Token "High-Risk"? Beyond just standard market volatility, high-risk tokens often lack fundamental transparency. They rely on hype rather than utility.
Major Red Flags to Spot: •
Unverified Teams: If the developers are anonymous and have no reputation, the risk of an exit scam increases.
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Artificial Hype: Be wary of tokens that are heavily promoted by bots or influencers without any technical backing or roadmap.
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Liquidity Issues: High gains mean nothing if you can't sell. Always check if the liquidity is locked.
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Social Proof Traps: Don't trust screenshots of gains. These are easily faked to create a false sense of legitimacy.
How to Protect Yourself: Always verify transactions on-chain rather than trusting social media claims. Using a secure wallet that provides clear transaction history, like Cwallet, can help you track your exposure effectively.
Read the full risk assessment guide here: What You Need to Know About High-Risk Tokens?