Shitcoins: Liquidity Lock, Burn, and Renounced Contracts
There are many parameters that need to be checked to ensure the safety of a contract.
Safety parameters include:
Liquidity Lock/Burn
A simple way to check liquidity lock/burn is to evaluate the holders (screenshot 1) of the pair address (screenshot 2) of any token.
The majority of the tokens (>99%) should be in a contract and locked via Pinksale, Unicrypt, Teamfinance, Mudra, or another reputable liquidity lock platform. It is recommended to check the duration of the lock (1 month or longer is standard on ERC-20).
To check the duration of the lock:
⦁ Navigate to Deployer transactions on Etherscan.io and find the lock transaction (screenshot 3).
⦁ Open the transaction details and decode the input data (screenshot 4). Take the value of the unlock time (screenshot 5) and input it into https://www.epochconverter.com/ to convert it to human-readable form. Liquidity can also be burned instead of being locked. If the holder of the LP pair is a dead address: 0x0000000000000000000000000000000000000000 or 0x000000000000000000000000000000000000dEaD then it is burned and can never be rugged.
The above is the old-school method of checking liquidity lock/burn. There are many tools that exist today that automatically evaluate safety parameters (i.e. DexSpy, Rick Sanchez Bot, etc.)
Ownership of the contract
Why does the contract need to be renounced?
Most commonly, the deployer of the token is also the owner; however, that is not always the case. If a token is not renounced, meaning it has an owner, they can execute all “write functions” on that particular contract and make various changes to it. Sometimes these changes can be malicious, such as increasing taxes, honeypotting, etc. If ownership is renounced, it means the owner of the contract must be a dead address. In order to check that, navigate to the “read contract”-section and make sure the owner is a dead address (screenshot 6). Example: https://etherscan.io/address/0xaa2c296c2de765f8579ceebf6c490fda1263e140#readContract
Hope this helped you stay safer in the world of shitcoins.
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