NFT Security Playbook: 20+ Attack Vectors & Defense Strategies

NFTs have revolutionized digital ownership, offering artists, collectors, and investors a new way to trade digital assets.

However, their rise has also given birth to a host of attack vectors that exploit market inefficiencies, smart contract vulnerabilities, and human psychology.

In this article, we explore some of the most prevalent NFT scams and attacks that every participant in the space should be aware of.

1. "Trojan Horse" NFTs

Malicious NFTs embedded with harmful smart contracts or hidden security risks.

An attacker airdrops an NFT to a wallet, and when the unsuspecting user interacts with it (e.g., listing, transferring, or approving transactions), the smart contract executes unauthorized actions, such as draining wallet funds.

Protection Measures:

• Avoid interacting with unknown airdropped NFTs.
• Revoke unnecessary approvals using blockchain explorers or security tools.
• Use a separate wallet for NFT transactions.

2. Impersonation Scams

Attackers create fake NFT projects, marketplaces, or social media accounts to lure users into scams.

Scammers impersonate well-known projects or influencers, promoting fake minting sites or secondary marketplaces where users unknowingly connect their wallets and approve malicious transactions.

Protection Measures:

• Verify official project links from multiple sources.
• Never click on unsolicited links in Discord or Twitter DMs.
• Use official marketplace verification systems.

3. Rug Pull Projects

Fraudulent projects that promise long-term development but disappear after raising funds.

Developers hype up a project, sell NFTs, and then abandon the community, making the assets worthless.

Protection Measures:

• Research the project team and check for transparent development plans.
• Look for projects with smart contract audits.
• Avoid hype-driven investments without due diligence.

4. NFT Duplicity

Scammers create fake versions of popular NFTs to trick buyers.

Counterfeit NFTs are listed on marketplaces with slight modifications to the original (e.g., missing metadata, different contract addresses), deceiving collectors into purchasing worthless copies.

Protection Measures:

• Verify contract addresses before buying.
• Purchase only from verified collections on trusted marketplaces.
• Cross-check metadata and token IDs.

5. Frontal Attacks

Manipulating NFT listings to trick users into selling their assets at lower prices.

Attackers make offers in a different currency than expected (e.g., listing in USDT but receiving an offer in a lesser-valued token). Unsuspecting users accept, thinking they are receiving a fair price.

Protection Measures:

• Double-check currency and offer details before accepting bids.
• Set price floors with clear currency denominations.

6. Wash Trading

Inflating the price of an NFT through self-trading to create artificial demand.

Scammers use multiple wallets or flash loans to repeatedly buy and sell an NFT, making it appear valuable, luring real buyers into overpaying.

Protection Measures:

• Use tools like Etherscan to track wallet activity.
• Compare NFT sales history for patterns of repetitive trading.
• Be cautious of NFTs with sudden price surges.

7. Flash Loans Exploits

Using flash loans to manipulate NFT floor prices or obtain high-value NFTs at a fraction of the cost.

Attackers borrow large sums temporarily, manipulate NFT prices (e.g., inflating collateral), and liquidate positions before repaying the loan, leaving platforms or buyers with devalued assets.

Protection Measures:

• Marketplaces should integrate oracle-based price feeds to prevent manipulation.
• Users should check price history for sudden and unnatural price changes.

8. Spoofing

Creating fake offers and sales history to trick buyers into making rushed decisions.

Attackers generate fake transactions that appear in marketplace UI but do not actually exist on-chain, making NFTs seem more in demand than they are.

Protection Measures:

• Verify transactions on the blockchain directly.
• Avoid making impulsive purchases based on recent activity feeds.

9. Ramping The Market

Coordinated efforts to drive up NFT prices through artificial hype and false scarcity.

Groups of traders conspire to buy up large quantities of an NFT collection, creating FOMO. Once the price skyrockets, they dump their holdings on unsuspecting buyers.

Protection Measures:

• Research organic demand vs. coordinated hype.
• Be cautious of projects with extreme price volatility.
• Monitor Discord and Twitter communities for signs of artificial shilling.

10. Nested Bot Attacks

Nested bots manipulate on-chain sentiment by engaging in coordinated actions that create the illusion of organic engagement. These bots are often deployed in layers, with some acting as primary influencers while others serve as amplifiers, resharing and reacting to content across various platforms.

This tactic makes it difficult to distinguish between genuine market interest and artificial hype, leading investors to make decisions based on false information.

Security Measures:

• Implement AI-driven bot detection to identify coordinated activity patterns.
• Monitor wallet interactions to detect repetitive, non-human-like trading behavior.
• Require multi-layer verification for social engagement metrics.

11. Audience of Bots

An audience of bots involves flooding social media and Web3 communities with automated accounts that engage with content to create an illusion of popularity. This strategy artificially inflates follower counts and engagement rates, making scam projects appear more legitimate.

Security Measures:

• Use identity verification tools to differentiate real users from bots.
• Leverage blockchain analytics to track wallet behaviors linked to bot activities.
• Introduce community-driven moderation to flag suspicious engagement.

12. Influencers / Shilling

Influencers often play a crucial role in Web3 adoption, but some engage in misleading promotions, either knowingly or due to poor due diligence. Shilling occurs when influencers are financially incentivized to hype up a token or NFT without disclosing their involvement, leading unsuspecting investors to buy in at inflated prices.

Security Measures:

• Enforce transparency rules requiring influencers to disclose paid promotions.
• Track historical patterns of influencers engaging in pump-and-dump schemes.
• Use smart contract audits to verify claims made by influencers regarding projects.

13. Unlimited Permissions on Token Approval

Users often unknowingly grant unlimited permissions when interacting with DeFi applications, allowing malicious contracts to drain their funds. This is exploited by attackers who create deceptive contracts disguised as legitimate services, leading users to lose control over their assets.

Security Measures:

• Encourage the use of approval revocation tools like Revoke.cash.
• Implement time-bound or transaction-limited approvals.
• Educate users on best practices for interacting with smart contracts.

14. Like Asset Price Divergence

This exploit occurs when attackers manipulate the price of similar assets (e.g., synthetic versions of stablecoins or mirrored stocks) to profit from arbitrage opportunities. By distorting the market through wash trading or flash loans, they create temporary disparities in asset valuations.

Security Measures:

• Deploy real-time price oracles with multiple sources for accurate pricing.
• Detect anomalies in price movements using statistical analysis.
• Implement safeguards against sudden liquidity shifts that could impact price stability.

15. Reward Not Updated

Some DeFi protocols fail to update rewards dynamically, allowing bad actors to exploit outdated incentives. Attackers repeatedly claim rewards at the previous rate before adjustments take effect, draining funds meant for the broader user base.

Security Measures:

• Enforce automatic reward recalculations at fixed intervals.
• Require a multi-signature governance model for updating rewards.
• Introduce withdrawal caps to limit excessive draining from outdated reward structures.

16. Code Exploits

Poorly written or unverified smart contracts contain vulnerabilities that attackers can exploit. Common exploits include integer overflows, unchecked external calls, and incorrect access controls, which allow unauthorized access to contract functions.

Security Measures:

• Conduct thorough smart contract audits before deployment.
• Utilize formal verification techniques to detect logical errors.
• Implement bug bounty programs to incentivize ethical hackers to find vulnerabilities.

17. Private Key Compromises

Private keys are the gateway to accessing blockchain assets. If compromised, attackers gain full control over the associated wallets, leading to irreversible loss of funds. Common attack vectors include phishing scams, keylogging malware, and insecure storage practices.

Security Measures:

• Use hardware wallets or multi-signature authentication for sensitive accounts.
• Enable two-factor authentication (2FA) where applicable.
• Educate users on avoiding phishing attacks and maintaining private key security.

18. Airdrop Exploits

Airdrops are used to distribute tokens, but they can be exploited in multiple ways. Attackers might create fake airdrops to lure users into connecting wallets to malicious contracts, or they might sybil attack airdrops by generating multiple wallets to claim rewards disproportionately.

Security Measures:

• Require proof-of-humanity verification to prevent Sybil attacks.
• Implement allowlist mechanisms to limit airdrop eligibility to genuine users.
• Educate users on verifying legitimate airdrops before interacting with them.

19. NFT Social Media Hack

Social media is a powerful tool for NFT communities, often serving as the primary medium for promotions, announcements, and engagement. However, attackers have leveraged API vulnerabilities to hijack social media accounts associated with NFT projects, leading to widespread scams.

Security Measures:

• Use OAuth with short-lived tokens and refresh mechanisms.
• Regularly rotate API keys and avoid storing them in public repositories.
• Implement multi-factor authentication (MFA) for social media accounts.
• Monitor account activity and set up alerts for unauthorized API requests.

20. Unsafe ERC-721 Operations

ERC-721, the standard for NFTs, introduces unique security challenges. Poorly implemented operations within APIs that interact with ERC-721 contracts can lead to asset theft or unintended token transfers.

Security Measures:

• Use reentrancy guards in ERC-721 smart contracts.
• Implement spender revocation mechanisms to allow users to revoke approvals.
• Verify metadata integrity using on-chain storage or cryptographic hashing.

21. Phishing Scams via APIs

Phishing remains one of the most prevalent attack vectors in Web3, and APIs play a significant role in automating these scams. Attackers create convincing interfaces that interact with malicious smart contracts, tricking users into signing harmful transactions.

Security Measures

• Verify contract addresses before approving transactions.
• Cross-check URLs and avoid connecting wallets to unknown dApps.
• Use hardware wallets for signing high-value transactions.
• Implement domain whitelisting for APIs to prevent interaction with malicious endpoints.

Final Thoughts

NFTs offer exciting opportunities but also come with unique risks.

Awareness of these attack vectors and implementing security best practices can help protect investors, collectors, and creators from falling victim to scams and market manipulation.

Always verify information, conduct thorough research, and stay cautious when trading NFTs.