Most losses in Web3 aren't caused by exotic hacks — they're caused by skipping five minutes of research. Here's the checklist worth running on every token before you buy, in the order that matters most.

1. Confirm the contract address

Start with the token's contract address, not its name or ticker — names and logos can be copied instantly, but a contract address is unique and immutable. Get the address from the project's official website, verified X account, or a trusted aggregator — never from a comment, DM, or unofficial link. Read more in our guide to smart contracts and contract addresses.

2. Check liquidity

Liquidity is the pool of funds backing a token's trading pair — without it, you can't sell even if the price chart looks healthy. Look for:

  • How much liquidity exists relative to the token's market cap. Thin liquidity means high slippage and easy price manipulation.
  • Whether liquidity is locked or burned. If a deployer can pull liquidity at any time, they can drain the pool and leave holders with a worthless token — the classic rug pull.
  • Who owns the LP tokens. A single wallet holding the liquidity position is a concentration risk.

3. Check holder distribution

Pull up the token's holder list and look at concentration. If a handful of wallets — especially the deployer or early insiders — hold a large share of supply, they can crash the price by selling at any time. Watch for:

  • Top-10 wallets holding an outsized percentage of circulating supply.
  • Wallets that look connected to each other (same funding source, same transaction patterns) — a sign of a coordinated dump setup.
  • Whether large holders are exchanges, locked contracts, or unlabeled personal wallets.

4. Check ownership and contract permissions

Read (or have a scanner read) what the contract's owner can actually do. Renounced ownership is reassuring, but not automatically safe — some contracts have separate privileged functions that survive renouncement. Look specifically for mint functions, blacklist functions, trading pause/unpause, and fee-changing functions that could be abused after you buy.

5. Review tokenomics

Understand the supply mechanics: total supply, circulating supply, whether more can be minted, and how buy/sell taxes work. High or asymmetric taxes (e.g. a low buy tax but a punishing sell tax) are a common way for a token to look normal until you try to exit.

6. Check trading activity

Look at the pattern of buys and sells, not just the price. A token with mostly one-directional activity from a small set of wallets, or suspicious volume spikes with no real trading behind them, is a red flag worth investigating further.

Doing all of this manually is slow — that's the point of a scanner

Running each of these checks by hand across a block explorer, a DEX aggregator, and a holder-distribution tool can take twenty minutes per token. A token risk scanner automates the whole checklist — liquidity lock status, ownership, mint functions, holder concentration, honeypot simulation — into a single report.