The 5 Most Dangerous Functions Found in Token Contracts

Introduction

Smart contracts run the show in crypto but if even one function is flawed, your funds could vanish. And while DeFi scams often come down to shady teams or hype-driven tokens, many disasters start inside the code itself.

In this guide, we’ll walk through five of the most dangerous functions and patterns hidden inside token contracts. These aren’t just theoretical issues they’ve been used to steal millions. Whether you’re a developer, investor, or just curious, these are the red flags worth knowing.

1. Reentrancy: The Recursive Drain

Imagine pulling funds from a vending machine, but before it updates your balance, you hit the refund button over and over. That’s what a reentrancy attack does.

A vulnerable contract sends ETH or tokens to another contract before updating its own internal records. If the recipient calls back into the original function recursively, it can drain funds repeatedly.

• The DAO hack: $60M drained
• Penpie DeFi: $27M gone in 2023

• Look for low-level call() before a balance update
• Check if transfer() or send() could’ve been used safely instead

• Use the Checks-Effects-Interactions pattern
• Apply nonReentrant guards like those in OpenZeppelin

2. Integer Overflows and Underflows

In older Solidity versions, math could wrap around like a speedometer. Add 1 to the max number, and it’d loop back to zero.

This can cause:

• Fake token minting
• Balance manipulation
• Logic errors that brick contract functionality

• Bancor: $23M loss
• BEC Token: infinite token creation

• Use Solidity 0.8+ (built-in checks)
• For older versions, always use SafeMath
• Validate inputs and test aggressively

3. ERC-20 Transfers to Contracts (The Silent Trap)

The ERC-20 transfer() function doesn’t notify the recipient. If you send tokens to a contract that isn’t built to receive them, they’re gone forever.

This isn’t a hack it’s just poor design. And millions have been lost this way.

• QTUM: $1.2M
• EOS: $1M
• GNT, STORJ, Tronix: hundreds of thousands lost

• Use approve() + transferFrom() when sending to contracts
• Double-check contract readiness before sending
• UI devs should display warnings
• Consider ERC-223 or ERC-777 tokens (they fix this)

4. Unlimited Allowances and Approval Race Conditions

ERC-20 lets users grant spending rights via approve(). But granting “unlimited” approvals opens a dangerous door.

If a contract is compromised, the attacker can drain all your tokens.

Even worse, when users try to update an allowance, attackers can “front-run” the change and steal more than intended.

• SHOPX: $7M stolen
• The DAO: used allowance risks as part of the exploit

• Set small, limited allowances
• Revoke approvals when done
• Use increaseAllowance() and decreaseAllowance() functions
• Consider wallets that auto-expire permissions

5. Weak Access Control

Functions like mint(), pause(), or upgrade() are powerful and if they’re exposed, they can be abused. This is why it's critical to know who owns the contract and what they can do.

Sometimes, access is checked using tx.origin, which is easy to spoof. Other times, devs forget to use onlyOwner or fail to revoke access when roles change.

• Dev mints infinite tokens
• Token logic is silently upgraded
• Trading is paused or frozen by a single wallet

• Use OpenZeppelin’s AccessControl or Ownable
• Avoid using tx.origin for access checks
• Use multisigs and time-locks for admin actions

Final Thoughts

The biggest threats in DeFi don’t always come from loud scams. Sometimes, they’re buried in code that looks normal on the surface. These five dangerous patterns have cost investors hundreds of millions not through hype, but through misused logic.

Before you buy any token, run it through a scanner like tokenchecker.io. It simulates sells, flags minting permissions, and exposes access control issues that would otherwise go unnoticed.

Because in smart contracts, what you don’t see is exactly what puts your wallet at risk.