Catching Scam Tokens with Temporal Graph Learning in Decentralized Finance

Decentralized finance has experienced phenomenal growth, revolutionizing the landscape of financial transactions and asset management via blockchain. Yet, this swift growth brings with it substantial challenges, notably the surge in scam tokens, imposing significant security threats on cryptocurrency investments and trading. Existing detection methods of scam token, primarily relying on analyzing contract codes or transaction patterns, struggle to catch increasingly sophisticated tactics employed by scammers. For example, contract-based analysis are unable to identify scams lacking overt malicious code, e.g., most rugpulls, while transaction-based methods generally lack the foresight to early-detect potential risks. In this paper, we present TOKENSCOUT, the first temporal GNN-based framework for scam token early detection. TOKEN SCOUT formulates token transfer data as a dynamic temporal attributed multigraph and leverages the temporal graph learning model to learn graph representations. It also builds a graph rep resentation refining model based on contrastive learning to learn a more discriminative representation space for risk identification. We evaluated TOKENSCOUT using a comprehensive dataset of 214,084 standard ERC20 tokens from 2015 to February 2023. TOKENSCOUT achieves a balanced accuracy of 98.41%. Additionally, from March to May 2023, deploying TOKENSCOUT on Ethereum effectively identified 706 rugpulls, 174 honeypots, and 90 Ponzi schemes, thereby alerting to potential risks exceeding $240 million.