How it works
The mechanism can involve removing liquidity, minting excessive tokens, blocking sales, changing contract rules or abandoning a project after fundraising.
What to check
Inspect contract permissions, liquidity controls, token concentration and team disclosures. Independent audits help identify code issues but do not guarantee honest governance.
- Inspect admin permissions
- Check token concentration
- Treat audits as limited evidence
Limits and risks
A polished website and active community do not prove that insiders cannot change or drain a project. Administrative power and token ownership deserve direct scrutiny.
Primary sources
Bitcoin Developer Reference↗Ethereum developer documentation↗FATF: Virtual Assets↗General information only. Investment products can lose value, and terms, fees and regulation can change.