Liquidity Vaults/Lockers
Vaults for LP tokens on MultiversX
To understand Liquidity locks, it's important to take a look at decentralised exchanges (DEXs) and Liquidity on these protocols. The most major dApps on MultiversX is xExchange. On top of this there are also further DeFi Protocols that would be able to generate positions of liquidity on their side such as Hatom, AshSwap, JexExchange, ProteoDeFi, OneDex and Exrond to name a few.
DEXs are decentralized platforms that allow users to trade tokens without the need for a central intermediary. The functionality and mechanics of xExchange is very well represented on the xExchange Docs page. Liquidity Pools consist of tokens that are used to provide liquidity for trading pairs. When a token is listed on a DEX a liquidity pool is created and assigns a LP token in return. These tokens represent the developer's share of the tokens in the pool and the trading fees generated from it.
A liquidity vault/lock is a smart contract that allows developers and project owners to transfer the LP tokens and "lock" them for a set period of time. During this time, the developer cannot access the tokens. After the period has passed this tokens can be claimed back.
This is a great way to protect against rug pulls, which occur when the primary liquidity provider in a pool suddenly withdraws all of their LP tokens, causing the pool's liquidity to dry up and the price of the token to collapse. In this way when projects are using the Pulsar Money Liquidity Vaults, they are increasing transparency and giving assurance to the community that bad events like the ones mentioned above won't happen.
Creating a liquidity lock on Pulsar Money is simple by using the Vaults Section in the dApp interface. Tutorials and guides are going to be published soon in the Guides section.
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