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Liquidity lock

Depositing LP tokens in a contract that prevents withdrawal until a set date, so the pool's founding liquidity cannot simply be removed.

Because a pool's liquidity belongs to whoever holds the lp-token, a launch team can withdraw it and leave holders with a token that cannot be sold. Locking those LP tokens in a time-release contract removes that specific ability for the locked period.

A lock is weak evidence, not proof of honesty. Check the amount locked as a share of total pool liquidity, the expiry date, whether the contract is a known locker or one the team wrote themselves, and who can still mint new tokens. A 30-day lock on 20% of liquidity is theatre.

Locks also do nothing about the other exits: a large team allocation sold into the pool, a mint function, a token-blacklist-function, or simply the price falling. See soft-rug for the version that needs no contract trickery at all.

Related: liquidity-pool, lp-token, rug-pull, soft-rug

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.

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