Liquidity Locks
Frequently asked questions about TrustSwap's Liquidity Locks
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Frequently asked questions about TrustSwap's Liquidity Locks
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Was this helpful?
Liquidity Locks are used by projects to avoid rug pulls by setting time-released vaults that return tokens to investors upon specific parameters such as specific dates and milestones.
Liquidity is crucial for any market and is an important factor for any trader or investor. By locking liquidity pair (LP) tokens in SmartLocks, projects can help their communities feel more confident in the long term tradability of the tokens and alleviate fears of the dreaded โRug Pullโ scam.
Letโs first understand how liquidity pools work.
Projects raise capital and use a percentage to supply the Decentralized exchange (DEX) pool with liquidity in one or more token pairs. In return, the DEX provides for each token pair a Liquidity Pool token that represents shares in that pool. Those tokens are also used to remove the liquidity from the DEX.
Via the Liquidity Locks wizard, projects can lock these liquidity tokens by sending them into a time-released vault that will only return the Liquidity Pool tokens at the configured date. During the lock period, the project cannot pull the liquidity from the exchange and dump those tokens on the holders causing the token price to drop near $0.
The vesting schedule is published with a transparent view of release dates and amounts to investors, as a proof of trust and security.
Projects can use Liquidity Locks after they supply the liquidity of the pair(s) to the DEX. Projects access and follow this simple procedure:
Under โCreate New Lockโ, select the appropriate chain
In step 2 select: โLiquidity Tokensโ and follow the steps
Make sure you are connected with a compatible wallet such as Metamask to complete the required steps.
SmartLocks can lock any ERC20 token as well as Liquidity Pair (LP) tokens generated from staking liquidity on UniSwap and other DEXs.
Supported DEXs/LP tokens:
UniSwap (ETH)
PancakeSwap (BSC)
Pangolin (AVAX)
QuickSwap (MATIC)