Why token locking is not as popular as liquidity locking for new cryptocurrency tokens?

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Every day, hundreds of new tokens are created on blockchains such as Ethereum and Binance Smart Chain. These tokens have liquidity pools on decentralised exchanges such as Uniswap and Pancakeswap, which give them value by pegging them against valuable tokens such as ETH or BNB, or stablecoins such as USDC. However, these decentralised liquidity pools are easily “rug pulled,” a common scam in which token developers flee with liquidity funds, leaving investors with worthless tokens they can’t sell.

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Liquidity locking, in which developers are required to lock liquidity pools in a time-lock contract, has been a frequent request from investors, and there are good platforms that offer this option. As a result, there have been fewer rug pull incidents. Instead, a new type of scam known as token dumps has gained prominence.

 

In a token dump scam, instead of directly withdrawing liquidity pool funds, token creators sell a large number of tokens and indirectly withdraw valuable tokens, such as ETH/ BNB/ Stabecoins, from liquidity pools. However, this scam can be avoided by using token locking, which is similar to liquidity locking in that developers’ tokens are placed in a time-lock contract. The tokens can only be withdrawn to developer wallets and sold on decentralised exchanges, once the lock period is finished.

 

Token locking, but at the other hand, has not gained the same popularity as liquidity locking. This is primarily due to a lack of good token locking platforms. Tokens are frequently designed with a variety of mechanics and may not work well with a time-lock contract unless proper attention is paid. Rebase tokens, for example, are a common matter of concern. To keep their prices stable, these tokens change their supply and, as a result, the number of tokens held by everyone. Time-lock contracts are unable to account for this and fail during withdrawal because the locked amount does not match the actual token holdings, which may have changed in the interim due to several rebase operations.

 

Another significant flaw is the lack of support for reward tokens. Many tokens offer holding rewards to reward their investors. These incentives can be in any popular and valuable token, such as ETH or BNB, and are automatically transferred to holders. Typical  Time-lock contracts either refuse such transfers or do not allow such rewards to be claimed during or after the lock period has expired. These can result in significant losses for original token owners, making token locking economically unviable.

 

Because of these flaws, fraudulent token developers have an excuse to not go for token locking. which they can then dump at the right time to fleece investors.

 

Unilocker has introduced a new generation of the advanced token lockers. The Unilocker Token Locker supports all popular types of tokens, including rebase, reflection, and reward tokens. You can easily configure your vesting timeline and instantly make it public with the lock certificate. You can claim the reward that has accumulated in the token locker at any time. You can also perform standard management functions such as lock extension, lock amount increment, and so on. Unilocker token locker is based on the well-known Unilocker user interface, which is incredibly straightforward and simple to use thanks to one-click buttons and slider-based selections. Unilocker token lock contracts are secure and only accessible to lock owners, making it impossible for other users to compromise them.

 

Genuine token creators may now use Unilocker with confidence and show investors that they are not planning a token dump in addition to liquidity locking.

 

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