Smart contracts were implemented on the Ethereum (ETH) blockchain network, ushering in a new era of cryptocurrency tokens. The Ethereum mainnet is undergoing upgrades to solve the issues it is facing - high transaction prices and slow network performance. As interest from crypto developers and investors returns due to upcoming upgrades, the number of projects preparing to debut on the Ethereum network increases. To launch your token, you must first deploy it on the Ethereum network using an ERC20 token. The next step should be to list your token on a DEX (Decentralized Exchange). DEXs act as automated market makers (AMMs), facilitating instant trading of your token without the requirement for a listing or P2P (peer-to-peer) transactions. The Uniswap V2 has surpassed the Uniswap V1 as the most popular platform for ETH liquidity providers.
To add liquidity to a DEX such as Uniswap, you construct a liquidity pool comprised of both issued and pegged tokens. The pegged token is a token of value, typically ETH. These liquidity pools are controlled by a smart contract; additionally, you receive LP tokens in your wallet as proof of ownership of the underlying liquidity. You can then use the LP (for Uniswap, these are called UNI-V2) tokens to withdraw the tokens and ETH you put in the pool contract.
Ethereum's token ecosystem is highly reliant on Uniswap liquidity. Regrettably, the decentralized nature of these liquidity pools also facilitates a type of fraud referred to as "rugpulls." Token holders prematurely sell their LP tokens in order to obtain liquidity dollars. This traps token purchasers, leaving them unable to sell and recoup their initial investment. Liquidity locking is a notion that was created to protect investors from falling for this scam. To prevent liquidity money from being taken from the Uniswap pool, the owner’s wallet temporarily transfers ownership of LP tokens to a time lock smart contract.
This notion has gained widespread adoption, and developers must now lock UNI-V2-tokens prior to marketing authentic ERC20 tokens. Without a liquidity lock, no one will ever buy your token. All new project owners have made LP token security a high priority.
Numerous measures can be taken to safeguard Uniswap's liquidity.
Alternatively, you can build your own time-lock contract and send the LP tokens to it. However, developing such a time-lock contract requires additional time and work, and you risk mistakenly leaving out any bugs, which could result in the loss of all liquidity money. Investors are also particularly skeptical of this method, as backdoors in the time-lock contract may enable early unlocking of the LP tokens.
If you prefer to keep things simple, you may want to consider using a reputable third-party locker provider. To safeguard your LP tokens, these lockers employ a time-lock contract that automates the process of locking. Following the expiration of the lock period, you will be able to withdraw the LP tokens to your wallet.
Unilocker is a rapidly growing Uniswap liquidity locker platform. Its features and pricing set it apart from the competition. Numerous innovative features, such as one-click buttons for standard lock percentage and duration, were pioneered in this liquidity vault. It features a straightforward and simple-to-use user interface. The platform is unrivaled in terms of pricing. As a result, it has emerged as the most discussed Ethereum liquidity locking platform.