Liquidity Lockdown on the KuApe Network
Introduction
We can simply define liquidity as the pool of assets created by a most crypto token developers on different blockchain networks. These assets are advertised and created to enable investors and crypto enthusiasts to purchase and sell instantly. In blockchain platforms where there is no pool, investors may have to wait for a longer period for someone to offer an order equivalent to their buy or sell requirements. Most times, in the absence of a liquidity pool (LP), it is difficult that the crypto developers will complete their intended trade. The process of developing liquidity involves pooling in an emerging token with an existing one of reputable value, such as Bitcoin or Ethereum, in a decentralized exchange like PancakeSwap or Uniswap. Funds from the pool are transferred to the exchange and the provider obtains the LP assets in return. This return can be utilized in the future to withdraw pool funds.
Why is there Need for Locking?
There are several reasons why locking liquidity pools is recommended for blockchain projects. When liquidity is left unlocked, it creates room for token developers to perform some illegal activities on the network. This activity is called a Rug pull and we can define it, in regards to the cryptocurrency industry, as a dubious maneuver performed by crypto creators, where they abandon a blockchain project and make away with the investors’ funds. This exists in decentralized finance ecosystems, usually on DEXs, where mischievous parties develop an asset and list it on a decentralized exchange, and then create a currency pairing of the token with a popular digital currency like Ethereum.
Investors are then drawn to start buying the token from the DEX, which will increase the number of popular coins in the liquidity pool. This happens because investors are transferring these assets to the exchange to secure the new token in anticipation of a boom and to make massive returns. Token developers, who have access to the established asset, can withdraw them from the exchange, convert them to fiat currencies and run away with it. This is why the pool is locked.
Locking is done by relinquishing the ownership of LP tokens for a specific time and transfer them to a time-based smart contract. Token developers cannot claim their LP funds without the ownership of LP tokens. Kuape network encourages liquidity locking because it increases the assurance in investors that token creators will not make away with their money. This is currently becoming a usual practice among most blockchain networks, which every token developer adopts and implement. Some crypto enthusiasts and investors use this to identify platforms that may be fraudulent and genuine.
Liquidity Locking on KuApe’s Network
For this meme community coin platform, the team completely locked their tokens on KoffeeSwap – a decentralized exchange platform. The team created an allocation plan for the liquidity pool for Kuape from the fee charged for all transactions. 11% is the charge for every transaction, and 3% from it is for the LP, 2% will go for burn wallet, and marketing wallet will get 3%.
USEFUL LINKS
Website: https://kuape.finance/
Telegram Group: https://t.me/kuapecommunity
Twitter: https://twitter.com/kuapefinance
Facebook: https://www.facebook.com/KuApeFinance/
Kuape-Dex: https://dex.kuape.finance/#/swap
Lightpaper: https://kuape.finance/wp%20content/uploads/2021/07/KuApeFinance.pdf
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