Fake Liquidity

🎭FAKE LIQUIDITY

📌 Definition Fake Liquidity means manipulating a token’s liquidity pool to make it look reliable. The goal is to convince users that “high liquidity = safe project.” But in reality, the liquidity is either withdrawable, paired with a worthless token, or controlled by the admin, making it fake.

🔧 How Does It Work

🎭 Most Common Fake Liquidity Techniques:

1. Admin Wallet-Funded Liquidity:

   • Both tokens in the pool come from wallets controlled by the admin.

   • Investors are not trading against real, external value.

2. Paired with a Worthless Token:

   • The new token is paired with a fake or zero-value token (e.g., XYZ/ABC, where ABC is worthless).

   • It looks like high volume, but there is no real market value.

3. Unlocked LP NFT:

   • The LP position is created, but the LP NFT is not burned or locked.

   • The admin can withdraw all liquidity at any time.

4. Manipulated Token Pairs Without Real Matching:

   • The token pair is created but doesn't support real swapping.

   • It may allow trades only for selected wallets, combining with honeypot behavior.

5. Flash Liquidity for Price Manipulation:

   • Large liquidity is added temporarily (sometimes with flash loans).

   • Price goes up, investors buy in, and the liquidity is removed.

🧾Smart Contract Mechanisms Used

Mechanism / Code	Description
LP NFT minting (Uniswap V3/V4)	The admin who holds the NFT can withdraw liquidity anytime.
transferFrom() restrictions	Blocks sales, making the liquidity appear present but inaccessible.
onlyOwner or unlockLiquidity()	Gives the admin full control over LP tokens.
Non-standard ERC20 pair tokens	Used to simulate value with fake or unverifiable assets.

⚠️ Risks

• The token cannot be sold — there’s no real backing or buyer liquidity.

• DEX price may look legitimate, but real trades don’t happen.

• Liquidity appears to exist, but it doesn’t generate real trading volume.

🛡️ Ways to Protect Yourself

Strategy	Explanation
Check if LP NFTs are locked or burned	LP tokens must be time-locked or burned to prevent withdrawal.
Check the quality of paired tokens	Is the other token real and valuable (e.g., ETH, USDT), or is it fake?
Review DEX trade history	Have real users traded, or only the admin?
Check who controls the LP NFT	If the admin still owns the LP token, it’s a red flag.
Use token security tools	Platforms like GoPlus, Dextools, and TokenSniffer help detect fake LPs.