Honeypot is a virtual trap designed to entice attackers so that security policies can be improved!
What exactly is a cryptocurrency honeypot, and why is it used?
On modern blockchains such as Ethereum, smart contract programs can be executed across a decentralized network of nodes. As smart contracts become more popular and valuable, they become a more appealing target for attackers. In recent years, hackers have targeted several smart contracts.
However, a new trend appears to be gaining traction: attackers are no longer looking for vulnerable contracts, but are instead taking a more proactive approach. Instead, they intend to dupe their victims into falling into traps by sending contracts that appear vulnerable but contain hidden traps. This unusual type of contract is referred to as a honeypot. But what exactly is a honeypot crypto trap?
Honeypots are smart contracts that appear to have a design flaw that allows an arbitrary user to drain Ether (the native currency of Ethereum) from the contract if the user sends a specific amount of Ether to the contract beforehand. When the user attempts to exploit this apparent flaw, a second, yet unknown, trapdoor opens, preventing the ether draining from succeeding. So, what exactly does a honeypot do?
The goal is for the user to focus solely on the visible weakness and ignore any indications that the contract contains a second vulnerability. Honeypot attacks work because people are frequently duped, just like in other types of fraud. As a result, people’s avarice and assumptions make it difficult to quantify risk. So, are honeypots prohibited?
What exactly is a honeypot scam?
In crypto cyber attacks such as honeypots, the user’s funds are imprisoned, and only the honeypot creator (attacker) has access to them.
An attacker does not need any special skills to set up honeypots in Ethereum smart contracts. In reality, an attacker possesses the same abilities as a regular Ethereum user. They only need the money to set up and bait the smart contract. In general, a honeypot operation consists of a computer, programs, and data that simulate the behavior of a real system that may be appealing to attackers, such as Internet of Things devices, banking systems, or public utility or transit networks.
Despite the fact that it appears to be a part of the network, it is isolated and monitored. Because legitimate users have no reason to access a honeypot, any attempt to communicate with it is considered hostile. Honeypots are frequently deployed in the demilitarized zone of a network (DMZ). This strategy keeps it connected while separating it from the leading production network. A honeypot in the DMZ can be remotely monitored while attackers access it, lowering the risk of a compromised main network.
Honeypots can be placed outside the external firewall, facing the internet, to detect attempts to infiltrate the internal network. The actual location of the honeypot is determined by its complexity, the type of traffic it wishes to attract, and its proximity to critical business resources. Regardless of where it is placed, it will always be isolated from the production environment.
While diverting attackers’ attention away from real-world assets, logging and viewing honeypot activity provides insight into the degree and types of threats that a network infrastructure faces. Cybercriminals can take over honeypots and use them against the company that set them up. Honeypots have also been used by cybercriminals to gather information on researchers or organizations, act as decoys, and spread misinformation.
Virtual machines are frequently used to host honeypots. For example, if the honeypot is infected with malware, it can be quickly restored. A honeynet, for example, is a network of two or more honeypots, whereas a honey farm is a centralized collection of honeypots and analysis tools.
Both open source and commercial solutions can help with honeypot deployment and administration. There are honeypot systems that are sold separately, as well as honeypots that are combined with other security software and marketed as deception technology. Honeypot software can be found on GitHub, where newcomers can learn how to use honeypots.
Based on the design and deployment of smart contracts, there are two types of honeypots: research honeypots and production honeypots. Honeypots for research gather attack data and are used to analyze hostile behavior in the wild.
They gather information on attacker tendencies, vulnerabilities, and malware strains that are currently being targeted by looking at both your environment and the outside world. This data can assist you in making decisions about preventative defenses, patch priorities, and future investments.
Production honeypots, on the other hand, are designed to detect active network penetration and deceive the attacker. Honeypots provide additional monitoring opportunities and fill common detection gaps associated with identifying network scans and lateral movement; thus, data collection remains a top priority.
Production honeypots run services that would normally run alongside the rest of your production servers in your environment. Honeypots for research are more complex and store a greater variety of data types than honeypots for production.
There are also several tiers within production and research honeypots, depending on the level of sophistication required by your company:
High-interaction honeypot: This is similar to a pure honeypot in that it provides a wide range of services, but it is less sophisticated and stores less data. Although high-interaction honeypots are not designed to replicate full-scale production systems, they do run (or appear to run) all of the services commonly associated with production systems, including operational systems.
Using this honeypot form, the deploying company can observe attacker habits and strategies. High-interaction honeypots require a lot of resources and are difficult to keep running, but the results can be worthwhile.
Mid-interaction honeypot: These imitate application layer characteristics but lack an operating system. They attempt to obstruct or confuse attackers so that businesses have more time to determine how to respond appropriately to an attack.
Low-interaction honeypot: This is the most commonly used honeypot in a manufacturing environment. Honeypots with low interaction provide a few services and are primarily used as an early warning detection tool. Because honeypots are simple to set up and maintain, many security teams deploy a large number of them across their network.
Pure nectar: Multiple servers power this large-scale, production-like system. It is packed with sensors and contains “confidential” data as well as user information. Even though it can be complex and difficult to manage, the information they provide is invaluable.
Several honeypot technologies are available.
Client honeypots: The vast majority of honeypots are servers that monitor for connections. Client honeypots actively seek out malicious servers that target clients, and they monitor the honeypot for any unusual or suspicious changes. To keep the research team safe, these systems are usually virtualized and have a containment plan in place.
Malware honeypots: These detect malware by utilizing pre-existing replication and attack channels. Honeypots (such as Ghost) are disguised as USB storage devices. If a machine becomes infected with malware that spreads via USB, for example, the honeypot will trick the malware into infecting the simulated device.
Honeynets: Rather than a single system, a honeynet is a network of several honeypots. Honeynets are intended to track an attacker’s actions and motives while intercepting all inbound and outbound communication.
Spam honeypots are used to simulate open mail relays and open proxies. Spammers will first test the available mail relay by sending themselves an email. If they succeed, they will send out a massive amount of spam. This type of honeypot is capable of detecting and recognizing the test and successfully blocking the massive amount of spam that follows.
Database honeypot: Because structured query language injections frequently go undetected by firewalls, some organizations will set up a database firewall to create decoy databases and provide honeypot support.
How to Identify a Crypto Honeypot
Examining the trade history is one method for detecting honeypot crypto fraud. In general, a cryptocurrency should allow you to buy and sell it whenever you want. In a honeypot scam, the coin will be purchased in large quantities, but it will be difficult to sell. This indicates that it is not a genuine coin and should be avoided.
Furthermore, based on contract transaction behavior, the data science approach can be used to classify contracts as honeypots or non-honeypots.
In Ethereum smart contracts, where can honeypots appear?
Honeypots are possible in three areas of Ethereum smart contract implementation.
Etheruem virtual machine (EVM)- While the EVM adheres to a set of well-established standards and rules, smart contract writers may present their code in ways that are misleading or unclear at first glance. These tactics could be costly for the unwary hacker.
The compiler-The compiler is the second area in which smart contract developers can profit. Some compiler-level bugs are well-documented, while others may not be. Unless the contract has been tested in real-world scenarios, these honeypots can be difficult to detect.
The Etherscan blockchain explorer-The Etherscan blockchain explorer is the third type of honeypot, and it is based on the fact that the data presented on blockchain explorers is incomplete. While many people implicitly trust Etherscan’s data, it does not always provide a complete picture. Wily smart contract developers, on the other hand, can take advantage of some of the explorer’s quirks.
How can you protect yourself from honeypot contract scams?
This section explains how to avoid being a victim of honeypot scams. There are tools available to help you spot red flags and avoid these currencies. For example, if the coin you’re considering buying is on the Ethereum network, use Etherscan, and if it’s on the Binance Smart Chain, use BscScan.
Determine your coin’s Token ID and enter it on the relevant website. On the following page, click “Token Tracker.” A new tab called “Holders” will appear. You can see all of the token wallets and liquidity pools there. Unfortunately, there are numerous item combinations to be aware of. To protect yourself from honeypot crypto scams, be aware of the following red flags.
If more than half of the coins are in a dead wallet, a project is relatively safe from rug pulls (but not a honeypot) (usually identified as 0x000000000000000000000000000000000000dead). Be cautious if less than half of the coins are dead or none are dead.
There is no audit: When a trustworthy company audits them, the chances of a honeypot are nearly always eliminated.
Holders for large wallets: Avoid cryptocurrencies with only one or two wallets.
Examine their website: This should be fairly simple; however, if the website appears rushed and the development is poor, this is a red flag! To find out when a domain name was registered for a website, go to whois.domaintools.com and type in the domain name. If the domain was registered within 24 hours or less of the project’s start, you can be certain it’s a forgery.
Examine their social media: Scam projects often have stolen or low-quality photos, grammatical errors, and unappealing “spammy messages” (such as “drop your ETH address below!”), no links to relevant project information, and so on.
Token Sniffer is another great tool for detecting honeypot crypto. Enter the Token ID in the top right corner to find the “Automated Contract Audit” results. If there are any warnings, stay away from the project. Because many projects now use contract templates, the “No prior similar token contracts” warning can be misleading.
If your coin is listed on the Binance Smart Chain, return to PooCoin, enter the Token ID once more, and keep an eye on the charts. Stay away if no wallets are selling or if only one or two wallets are selling your preferred coin. It’s most likely a honeypot. If many wallets are selling the chosen coin, it is not a honeypot. Finally, before parting with your hard-earned money to buy cryptocurrencies, you should do extensive research.
What distinguishes a honeypot from a honeynet?
A honeynet is a network of at least two honeypots. It can be advantageous to have a connected honeypot network. It enables businesses to track how an attacker interacts with a single resource or network point, as well as how an invader moves between network points and interacts with multiple points at the same time.
The goal is to convince hackers that they have successfully breached the network, thus adding more false network locations to the arrangement’s realism. Deception technology refers to honeypots and honeynets with more advanced implementations, such as next-generation firewalls, intrusion detection systems (IDSes), and secure web gateways. Intrusion detection systems are devices or software programs that monitor a network for malicious activity or policy violations. Deception technology’s automated capabilities enable a honeypot to respond to potential attackers in real-time.
As new cyber threats emerge, honeypots can help businesses keep up with the ever-changing risk landscape. Honeypots provide critical information to ensure an organization’s readiness and may be the best way to catch an attacker in the act, despite the fact that it is impossible to predict and prevent every attack. They are also an excellent source of information for cybersecurity professionals.
What are the advantages and disadvantages of honeypots?
Honeypots collect data from legitimate attacks and other illegal activity, providing analysts with a wealth of information. There are also fewer false positives. Ordinary cybersecurity detection systems, for example, can generate a large number of false positives; however, a honeypot reduces the number of false positives because genuine users have no reason to contact the honeypot.
Furthermore, honeypots are worthwhile investments because they only interact with malicious actions and do not necessitate high-performance resources to process massive amounts of network data in search of attacks. Finally, honeypots can detect malicious activity even if the attacker is using encryption.
Although honeypots have many advantages, they also have many disadvantages and risks. Honeypots, for example, only collect data in the event of an attack. There have been no attempts to access the honeypot, so no data to investigate the attack exists.
Furthermore, the honeypot network only collects malicious traffic when an attack is launched against it; if an attacker suspects a network is a honeypot, they will avoid it.
Honeypots are generally distinguishable from legal production systems, implying that skilled hackers can easily distinguish between the two using system fingerprinting techniques.
Despite being isolated from the real network, honeypots eventually connect in some way to allow administrators access to the data they contain. A high-interaction honeypot is often regarded as riskier than a low-interaction honeypot because it seeks to entice hackers to gain root access.
Overall, honeypots help researchers understand risks in network systems, but they should not be used in place of standard intrusion detection systems. For example, if a honeypot is not properly configured, it could be used to gain access to real-world systems or as a launchpad for attacks on other systems.