In this article, we will be showing you how to find out if a token’s liquidity is locked, but before then, what is liquidity? It refers to the extent to which a token can be easily bought or sold without fluctuating the price in the market.
Locking liquidity is very important as it guarantees the safety of traders’ investments. It also protects traders and investors from RUGPULL.
Rugpull occurs when traders can no longer sell a token because its liquidity has been removed by the developer. This is when the token developers disappear with liquidity funds leaving traders with untradeable assets.
Liquidity locking means renouncing ownership of the LP tokens. To do this, developers must lock LP tokens in a time lock smart contract.
When this is done, nobody will have access to do anything with the LP tokens, at least until the lock duration is over.
For one, locking liquidity instills confidence about a project. It also assures traders that their investment is safe.
Therefore, it is important for developers to lock their liquidity since it is one of the prerequisites of a real DeFi project.
Before investing in a token, it is important to check if its liquidity is locked. In this guide, we’ll walk you through how to conveniently do this.
Here are various ways to check if a token’s liquidity is locked.
- Using Blockchain explorer
- Using Pair explorer
- Checking on Liquidity Locker
1. Using Blockchain explorer
The first way to check the lock status of a token’s liquidity is via its blockchain explorer.
For example, if the token is on the Binance Smart Chain Network, you’d have to go to bscscan.com and find the contract address.
If it’s on Ethereum, use Etherscan.io. You will find other necessary information about the token, such as the number of holders and so on.
Go to the corresponding blockchain explorer and search for the token with its name or contract address.
Under token information, you will see Holders. For ERC-20 tokens, simply look for UNISWAP-V2 tokens. For BEP-20, look for Cake-LP tokens under holders. This is where you can find holding for LP tokens.
Tap the LP tokens designated by UNISWAP-V2 tokens or Cake-LP tokens.
Under the LP tokens, you can view the LP contract address, holders, and other important information.
Tap Holders again to view LP token holders.
Check for a contract symbol in the address with the largest holding. If the largest LP holdings have this contract symbol, then liquidity is locked.
2. Using Pair Explorer
Another way to check if the liquidity of a token is locked is by checking the token information on external pair explorers like Poocoin or Dextools.
1. For BEP-20
To use Poocoin to check if the liquidity of a token is locked, go to Poocoin.app.
In the search bar, input the name or contract address of the token.
In the sidebar, you can view all information about the token, including price and LP holdings in different DEXes.
If liquidity is not locked, these pair explorers will warn you off trading the token with warning signs.
Meanwhile, you can check the percentage of liquidity holdings by clicking on HOLDERS under the largest LP holdings.
Dextools is the suitable pair explorer for ERC-20 tokens. Dextools is a great DeFi platform with exchange and aggregating functions.
To use Dextools to check if the liquidity of a token is locked, navigate to https://www.dextools.io/.
Search for the token with its name or contract address.
In the token information, check Liquidity info. If it has a green padlock, that simply means the liquidity is locked, and it is safe to trade the token.
You can view more information about lock percentage and duration by clicking on the lock.
3. Checking on Liquidity Locker
Deeplock is a BNB Chain based liquidity locker that allows developers to lock their Pancakeswap LP tokens. You can also lock BEP-20 tokens in a time-lock smart contract.
Before checking the lock status of LP tokens, you need to copy the LP contract address from the blockchain explorer.
Navigate to Poocoin and click on Holders under LP holdings. This will show LP details, including LP contract address and holders.
Copy the contract address.
To check if a token’s liquidity is locked with Deeplock, navigate to Deeplock.io.
On the top right corner of the homepage, click LOCKER.
Finally, paste the LP contract address in the search bar for LP tokens. Afterward, details of the lock status and duration of the LP tokens will be displayed.
For ERC-20 tokens, use Unicrypt.network and follow the same procedure as that of DeepLock.
How to Check if Liquidity of a Token is Locked on PancakeSwap or Uniswap?
Uniswap and Pancakeswap only offer to add/remove liquidity but it’s not a locking service. Therefore, there’s no way to know if liquidity is locked on both DEXes.
The safety of locked liquidity still depends on the duration and percentage of lock. Typically, the lock duration of at least two years or more is ideal.
This will provide a good time for investors and developers to create trust and grow the project to a level where no trader will be afraid of losing their investment.
Meanwhile, a minimum of 85% lock is perfect to avoid price fluctuations even if other ones are removed.
While it may have seemed so hard to check the lock status of a token’s liquidity, we hope this article has done justice to the topic. The process is not hard, as long as you follow it step-by-step.