What Is an ‘Honeypot’ Contract in the Context of Crypto Scams?

A honeypot is a malicious smart contract designed to allow only the creator to sell the tokens, while others can buy but not sell. Investors are lured in by the rising price and buy tokens, only to find they are trapped and cannot exit their position.

The scammer then drains the liquidity. It is a subtle form of a rug pull executed purely through contract code manipulation.