The blockchain network has grown so large over the years that a new cryptocurrency is created every minute. The technology, which has so much to offer, has also attracted scammers who have discovered several methods to defraud users on the network – Rug Pulls being one of the most popular methods.
This scam is staged when a project owner withdraws the funds from the liquidity pool of their token created on a decentralized exchange such as UniSwap or PancakeSwap (where investors can buy and sell the token instantly). Essentially, the scammers create a high-quality pool of liquidity and act aggressively to attract more and more investors. The carpet heist happens the moment the fraudster uses his liquidity provider tokens to immediately withdraw all of the pool's liquidity and disappear. The solution that investors are now actively demanding from projects so that they feel confident investing in them? Liquidity lock.
What is a Liquidity Locker?
When launching a new token, it is important to form a liquidity pool on an AMM (Decentralized Automated Market Maker) such as PancakeSwap or Uniswap so that the token is tradable. In exchange for providing liquidity to the pool, users receive liquidity provider tokens. Project owners hold the majority of the pool's LP tokens as they funded the pool's initial liquidity. Liquidity pools are at risk when a project owner owns most of the project's LP tokens because that means they can withdraw and run away with the liquidity at any time.
Liquidity lockers are a decentralized security mechanism that prevents project owners from running away with the pool's liquidity. An LP locker is a smart contract that stores LP tokens for a set period of time that is completely immutable by the liquidity locker provider team. Liquidity lockers help project owners build trust in their communities. More and more investors now expect a project's liquidity to be locked before purchasing their tokens.
Why is a liquidity lock essential?
Liquidity locks benefit both investors and developers. It protects investors from “rug pulls” that result in massive losses. The locking strengthens the legitimacy of the token and investor confidence. Even if a project owner has no malicious intent and the project itself has sufficient legitimacy, liquidity lockers help protect the LP from hacker attacks and also protect against human error. It is important to note that storing LP in a multi-signature wallet or in a home-made locker is not an adequate alternative.
Best Liquidity Lockers of 2023
After comparing many options available in the market, we have created this comprehensive list of the best liquidity lockers of 2023.
List of top liquidity lockers
1. UNCX Network 2. Mudra Locker 3. DeepLock 4. DYP Locker
Various decentralized services are available through the UNCX network, a multi-chain decentralized platform. Specifically, it is a liquidity locking service that allows developers to permanently lock liquidity on AMMs like Uniswap. The idea of liquidity lock was developed by UNCX in June 2020 and they are currently the largest liquidity lockers in the industry with one TVL of 240 million.
The UNCX liquidity lockers have many great features, especially lock sharing, incremental locks, and ownership transfer. UNCX is known for having the most trusted liquidity vaults in the industry and no known vulnerabilities. This, coupled with their renowned token vesting service and reputation for excellent customer service, makes them the best liquidity locker on the market. They are available on Ethereum, BSC, Polygon, Arbitrum and more.
Mudra Liquidity Locker is for Binance Smart Chain. It allows you to lock liquidity pool tokens immediately, withdraw them after the lock expires, and add more tokens to the lock. Unlike most platforms, it has the lowest fees and does not force developers to use their utility tokens. Mudra Liquidity Locker's user-friendly interface is tailored to the needs of developers. The effectiveness and ease of use of the platform is supported by basic but essential features such as the ability to distinguish between a token address and an LP address. The Mudra ecosystem is strong overall and offers a wide range of tools for investors and cryptocurrency developers (BEP-20 token generator, PancakeSwap liquidity configuration).
Token owners have the option to generate a verified lock certificate using a QR code, which they can then share on the token's website and social media channels.
With its foundation on the Binance Smart Chain, DeepLock is an excellent liquidity locker that allows developers and teams to lock all of PancakeSwap's LP tokens based on the BEP-20 standard, protecting investors from DeFi carpet pulls.
In addition to the liquidity locking feature, DeepLock also includes a decentralized and robust launchpad, auto-locked liquidity, and a vesting feature that allows developers to put their predetermined locking plan into practice.
A decentralized finance network called DeFi Yield Protocol offers a range of tools and services such as: B. Yield farming, staking and liquidity lockers. Developers can lock liquidity across a range of AMMs, including SushiSwap, Balancer, Uniswap and PancakeSwap, thanks to DYP lockers, increasing investor confidence in the project.
DYP Locker does not charge developers any fees for locking liquidity. When the lockup period expires, the liquidity locker releases DYP and the locked LP tokens to the recipient wallet. This means that when developers release their liquidity, they will get back the locked DYP. As a relatively new participant in the DeFi yield protocol, DYP Locker has not yet locked up a significant number of LP tokens.
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The content presented may contain the personal opinions of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
Frequently Asked Questions (FAQs)
Ideally, one to three years is sufficient to close the pools. Additionally, this would give your coin enough time to grow to a size where investors would pool their money and not have to worry about owners withdrawing too quickly.
Investors join the liquidity pool in the hope of making more money than they originally invested. Therefore, it is best to bind around 80-90%. (60% is the minimum required for credibility).
Liquidity lockers are intended to be completely decentralized and smart contracts are immutable. This means that once a lock is set, no one can change the data and withdraw the tokens until the unlock date. This is a great way to prevent funds from being hacked.
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