How Does Locking Liquidity Prevent a Rug Pull? ▴ Learn

How Does Locking Liquidity Prevent a Rug Pull?

Locking liquidity means placing the pooled funds (e.g. the ICO token and a base currency like ETH) into a smart contract for a set duration. This contract prevents the team from withdrawing the funds prematurely.

By removing the ability to drain the liquidity pool, the primary mechanism of a hard rug pull is neutralized. The longer the lock-up period, the safer the investment is considered.

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