Utilizing Etherscan to Read a Smart Contract

How To Get Started?

The first step involves finding the smart contract address for the project you are dealing with. It can be found either on the project’s official website, whitepaper, GitHub page, Discord, OpenSea page, marketplace listing page (for NFTs), or using tools such as Coinmarketcap and CoinGecko. Once you have the address, copy it and then proceed to etherscan.io and paste it into the search bar.

On the page, you can find several things that can help you assess a project:

Contract Identity

This has something to do with the fundamentals of a given protocol, such as the creator, when it was created, the value locked, and its native tokens, all information that can help you get a clearer picture of the project.

The information here is about reserves, value and tokens. It shows the total ETH held by the contract and the total value of other assets held in the contract. You can also see the creator, transaction hashes and details about the wallet address of the creator.

There is also the token tracker, which, if you click on it, redirects you to a page with all the information about the native token of the smart contract. By clicking on the wallet address of the contract creator, you will be directed to a page that has all the transaction and fund details of the wallet that created the smart contract. Therefore, it is possible to assess how active the wallet has been and what wallets and contracts it has previously interacted with.

Token Details

Token supply and ownership is key when assessing the utility and future of a project. This means knowing the total token supply to understand what participation rights you might have in a project if you buy a certain number of tokens. It also helps you know your stake in the project, and how safe you are against dilution or major dumps.

Also, ownership distribution can give you a good indication of the security of the project. The higher the number of holders and the more evenly these tokens are distributed, the safer and more decentralized the project is. You can check the details of the native token of a contract by clicking on the Tracker link, where you will be taken to a page that displays the price of the token, its fully diluted and circulating supply market capitalization, the maximum token supply, total number of wallets holding the token and the number of transfers that have been made.

Contract Transactions

Transaction history can offer some insight into the project and its legitimacy. You usually expect a genuine project to have many transactions done with its native token over the period it has existed. It is an indication of an active user base; however, if all the transactions have only taken place recently and feature the same wallet, you may need to dig deeper.

Analytics

This part will help you see how well the contract has performed with its users. Here, you will see a graphical representation of the number of transactions using the contract. Any smart contract with suspicious code will certainly not have many transactions, and it may be an indicator that you need to be more cautious.

Contract Code and Function

If you are well versed with coding, you can review the contract code and assess the contract’s legitimacy. This can be seen on the “contract” tab where you check the contract transactions.

Blockchain is based on a culture of transparency, and the code should be published for everyone to view. However, there are incidences where this data is not public. It does not necessarily mean that the project is a scam, but it is an essential piece of data you lack access to, and you need to factor this in as you make your decision.