Are they really locked in?
Orca’s Liquidity Locking tool is finally here. Token creators and LPs can now create a pool with locked liquidity as opposed to burning a position NFT, keeping the ability to harvest yield from the pool.
In this article, we’ll walk through how to lock liquidity on Orca and how to harvest yield from locked positions. We’ll also cover key partners who have integrated Orca’s liquidity locking as part of their protocol or project.
The Lowdown on Liquidity Locking
Liquidity locking allows token creators to secure a portion of their token’s liquidity when launching a liquidity pool. Token creators can not withdrawn the liquidity that has been locked, but they can continue to harvest yield from the position.
For traders, locked liquidity gives confidence that the token’s liquidity is stable, reducing the risk of sudden losses due to liquidity withdrawal. Locked liquidity also makes it harder for someone to manipulate the token price through withdrawals or selloffs. For token creators, locking liquidity signals that the issuer has a vested interest in the project’s long-term stability. When a portion of the liquidity is secure, token creators can also attract more participants & build a more reliable & stable market.
Traditionally, teams would ‘burn’ their liquidity by burning a position NFT or sending the liquidity pool tokens to a burn address as a sign of ‘good faith’ to the market. However, the drawback to this approach was that once burned, the token creator would miss out on fees and rewards generated by the pool (which can represent significant funds!).
Instead, through liquidity locking, teams can capture fees and rewards from their liquidity pool and use these funds to support their project.
Rug Pull!
Liquidity locking can prevent token creators from suddenly withdrawing liquidity and “rug pulling” (no one’s favorite activity). It’s not foolproof, however, teams can still manipulate prices, hoard supply, and other shady actions. Always DYOR on new tokens.
Locking up Liquidity with Orca
To lock a portion of your liquidity with Orca, add liquidity to the pool, then select Lock Liquidity. Only full-range positions are supported.
For pools with locked liquidity, owners can harvest yield from the pool as usual on Orca.
To view what portion of a pool has been permanently locked in the pool, hover over the lock icon on the pool:
Important Notes:
- Once locked, liquidity cannot be unlocked so please ensure that the tokens being locked are correct before proceeding.
- Only full-range positions are supported.
Partner Integrations
See liquidity locking in action with GoFundMeme pools on DexScreener:
Conclusion
Liquidity locking serves as a safeguard that benefits both asset issuers and traders by reinforcing credibility and reducing fears of rug pulls, ultimately contributing to a healthier and more trustworthy trading environment.
We’re committed to making liquidity provision more flexible and accessible, empowering both new token creators and liquidity providers of all experience levels. And trying to keep you from taking an L, as best we can!
Because no matter whether you’re a trader, market maker, or builder —
Orca makes it easy. 🐳
