Welcome to the bulliscoming guide on How to check if Liquidity is locked, decentralized exchange (DEX) like Pancakeswap utilizes a liquidity pool (LP) to facilitate the trading of a particular asset that’s being listed on the exchange, the liquidity provider or the dev deposit an equal value of two tokens to create a pair e.g BNB/CAKE within which the depositor receives a share of pools for every trade of the asset that the liquidity is provided for.
The liquidity provider can remove liquidity and claim the shares of pools (liquidity pools token) at anytime
Now in the case of a new token that’s not listed on any centralized exchange (CEX) or other markets, the ability to remove liquidity at any time by the liquidity provider or the dev would be a red flag for the asset investors as they will get stuck and won’t be able to sell the asset back to a valuable asset when liquidity has been been removed by the asset dev by the liquidity provider.
To prevent this crypto market scam as in the case of one acclaimed fake Crypto guru IFEANYI, investors ought to confirm if the liquidity provided for the asset is locked so as to give them more confidence that the asset they are investing in has a minimal case of rug pull.
So without much ado, let’s understand what a locked liquidity lock means and how to check if liquidity is locked on different DEX
What Liquidity Means
Liquidity in terms of cryptocurrency simply means how easily particular crypto can be bought or sold without it affecting the asset price
What is Liquidity Locking
Liquidity lock is a mechanism that prevents the founders of a project, or anyone else with large amounts of tokens, from selling them on the market for a set period of time. This is often done to prevent the market from being flooded with tokens, which could lead to a price crash. To check if a coin’s liquidity is locked, you can do the following:
- Check the project’s website or whitepaper. This is the most reliable source of information about liquidity locks.
- Check the project’s social media accounts, such as Twitter or Telegram. The team might have announced the liquidity lock there.
- Check the project’s listing on cryptocurrency exchanges. Some exchanges, such as Binance, disclose the liquidity lock status of a coin.
- Check the block explorer for the coin. A block explorer is a website that allows you to view transactions on a blockchain. If the liquidity lock is in place, you should be able to see it reflected in the transactions on the blockchain.
- Ask the project team or community directly. If you can’t find the information you’re looking for, you can try reaching out to the project team or the community for more information.
It’s important to note that liquidity lock is not always applied to all tokens. Some tokens may be exempt from the lock, or the lock may only apply to a portion of the total supply.
How to check if Liquidity is Lock in Bscscan
To check if liquidity is locked on bscscan, navigate to the token overview you want to analyze. In this guide, am analyzing a BSC token name Sheep Token
Then scroll down, click on holders and then click on the address tagged as the name of the token that you’re analyzing as in the image below Pancakeswap: SHEEP2 for SHEEP TOKEN
After you click that, in the page that pop-up, scroll down and click on the address under Filtered by the token holder as in the image below
On the next page, scroll down and click on Pancake Lp under the token tracker
After that, then scroll down to the next page, click on the holder and then click the first address
After you’d click the first address under the holder section then click on the address under Filtered by the token holder on the next page
On the next page, scroll down and click on the contract then click read as shown in the image below. This show that Sheep token liquidity is locked
How to check the duration of locked liquidity
Confirming if liquidity is locked is not enough for investors that are analyzing a particular asset they want to invest in as the asset dev can lock liquidity for a short period of time like just a 1week duration within which they can remove it after one week and will leave investors that have already confirmed the locked liquidity wondered which would have resulted to loss of asset of an investor as they won’t be able to sell the asset back to liquid cash or any valuable asset
Below is the step-by-step guide on how to confirm the duration of the locked liquidity.
After you’ve checked the liquidity and confirmed that it’s locked as in the previous guide on how to check repeated in the image below then copy the numbers under Release time
Navigate to epochconverter.com/, scroll down a bit and paste the copied numbers in the box then click Timestamp to human date as shown in the image below
It will show you the date a d time that liquidity is locked, as in the case of our analyzed token (Sheep token) in this guide, it shows that liquidity is locked until 29 July 2021 which means the liquidity will be unlocked on 29th and the dev can remove liquidity and rug pull if they want to.
How long should liquidity be locked?
There is no one-size-fits-all answer to this question, as the optimal length of time for liquidity to be locked will vary depending on the specific project and its goals. However, there are some general considerations that can be taken into account when making this decision.
One important factor to consider is the risk of rug pulls. A rug pull is a type of scam in which the developers of a project abandon it and take all of the liquidity from the token’s liquidity pool. By locking liquidity, developers can make it more difficult for them to rug pull their project, as they will need to wait until the liquidity is unlocked before they can withdraw it.
Another factor to consider is the project’s tokenomics. If the project is designed to be a long-term investment, then it may make sense to lock liquidity for a longer period of time. This will help to ensure that the token’s price is more stable and that it is not subject to as much volatility.
However, if the project is designed to be a shorter-term investment, then it may make sense to lock liquidity for a shorter period of time. This will allow investors to get in and out of the project more easily.
Ultimately, the decision of how long to lock liquidity is a trade-off between security and flexibility. By locking liquidity for a longer period of time, developers can make their project more secure, but they will also make it less flexible.
Here are some of the factors that may affect the length of time that liquidity is locked:
- The risk of rug pulls
- The project’s tokenomics
- The project’s goals
- The preferences of the project’s community
It is important to note that there is no guarantee that locking liquidity will prevent a rug pull. However, it can make it more difficult for developers to rug pull their project, and it can also help to stabilize the token’s price.
If you are considering investing in a project with locked liquidity, it is important to do your research and understand the risks involved. You should also make sure that you understand the project’s tokenomics and its goals.
Can you sell crypto if liquidity is locked?
Yes, you can sell crypto if liquidity is locked. However, you will need to wait until the liquidity is unlocked before you can sell your tokens. The amount of time that you will need to wait will depend on the specific project and its lockup period.
Liquidity is the ability to buy and sell an asset quickly and easily. When liquidity is locked, it means that the tokens cannot be traded on a decentralized exchange (DEX). This is often done as a way to prevent rug pulls, which are a type of scam in which developers abandon a project and take all of the liquidity from the token’s liquidity pool.
There are a few different ways to lock liquidity. One way is to use a smart contract. A smart contract is a piece of code that is stored on the blockchain and that can be used to automate certain tasks. In the case of liquidity locking, a smart contract can be used to lock tokens in a pool and prevent them from being traded until a certain date or condition is met.
Another way to lock liquidity is to use a centralized exchange (CEX). A CEX is an exchange that is owned and operated by a central authority. CEXs often offer liquidity locking services, which allow users to lock their tokens in a pool and prevent them from being traded for a certain period of time.
If you are considering investing in a project with locked liquidity, it is important to do your research and understand the risks involved. You should also make sure that you understand the project’s lockup period and when the liquidity will be unlocked.
Here are some of the risks associated with investing in a project with locked liquidity:
- The project may not be successful and the tokens may not be worth anything when the liquidity is unlocked.
- The project may be abandoned and the liquidity may not be unlocked.
- The project may be subject to a rug pull.
If you are considering investing in a project with locked liquidity, it is important to weigh the risks and rewards carefully. You should also make sure that you understand the project’s tokenomics and its goals.
The easiest way to make fortune out of cryptocurrency is to be an early investor in a promising cryptocurrency but in the quest of being an early investor, investors ought to do any research about the asset they’re planning to invest in as there were many cryptocurrencies being created on a daily basis without real roadmap and vision but for the dev selfish interest most especially BSC tokens
Investors should find out if the dev has locked their Liquidity and the duration so as to rest assured that the project rug pull case is minimal
However, when analyzing any crypto project, Liquidity lock and the duration should the first priority in fundamental research of the project before any other metrics that can make the asset worth investing in.