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What Is “Locking Liquidity” and How Does It Prevent a Rug Pull?

Locking liquidity puts LP tokens into a time-lock contract, preventing developers from withdrawing the pool's underlying assets until a set date.
Greeks.Live17.11.25

What Is “Locking Liquidity” and How Does It Prevent a Rug Pull?

Locking liquidity means placing the LP tokens ▴ which represent the developers' share of the pool ▴ into a time-locked smart contract or a third-party locker service. This contract prevents anyone, including the developers, from withdrawing the underlying assets until a specified date.

By making the LP tokens inaccessible, the mechanism for draining the pool is disabled, thus effectively preventing a developer-initiated rug pull.

How Does a “Rug Pull” Differ from a “Pump and Dump” in the Crypto Space?
How Does Locking Liquidity Prevent a Rug Pull?
What Is the Risk of “Rug Pull” in the Context of Providing Liquidity to a New Token Pair?
What Is a “Rug Pull” in the Context of ICOs?

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