Liquidity Locks

To understand liquidity locks, it's essential to first grasp the basics of how decentralized exchanges (DEXs) and Liquidity Pools (LPs) function. If you're not already familiar with these concepts, we recommend watching the following video.

What is a Liquidity Lock?

A liquidity lock prevents liquidity provider token (LP token) holders from withdrawing their funds from a liquidity pool. This is accomplished by sending the LP tokens to a time-locked smart contract, typically using liquidity-locking services like CryptoHub. Alternatively, LP tokens can be burned, making it impossible to retrieve them, rather than simply locking them.

Token holders can specify the duration of the lock, divide it into smaller segments with different owner addresses and end dates, or even transfer ownership of the lock to another wallet address. While the lock is in place, the token holder is unable to access the locked tokens.

FAQs

Who are Liquidity Locks for?

Liquidity locks are the standard practice for all serious crypto projects looking to build a community and raise external funding. Locking liquidity is effective for brand-new projects and teams that have no prior experience in the industry to help them establish credibility and trust.

How long should I lock my liquidity for?

The longer the better. Long-term locking of liquidity signals your commitment to delivering on what you have promised.

How much of my liquidity should I lock?

If you intend to be the main liquidity provider for a liquidity pool, we recommend locking 80-100% of the total pool value.