Liquidity Locks vs LP Burns: What Actually Protects You

When a token launches on a DEX, someone deposits the token plus a paired asset (SOL, ETH, BNB or a stablecoin) into a liquidity pool. In return they receive LP tokens — a receipt that lets them withdraw that liquidity later. Whoever holds the LP tokens can pull the pool. That single fact is why "is the liquidity locked?" is one of the first questions to ask about any new token.

//What happens in a liquidity pull

If the creator keeps the LP tokens, they can redeem them at any time. They get back the paired asset — including everything buyers put in — and the pool is left almost empty. Your tokens still exist, but there's nothing to sell them into. That's a hard rug, and it's the most direct form of rug pull.

Chainalysis' 2025 analysis of suspected pump-and-dump tokens found that about 94% of the pools involved were drained by the very address that created them. Controlling the LP is how that happens.

//Option 1: Burning the LP tokens

Burning means sending the LP tokens to an address nobody controls (such as a dead address or the incinerator on Solana). Once burned, the liquidity can never be withdrawn by anyone. It stays in the pool forever, earning fees for no one.

Strengths: permanent; nothing to expire; easy to verify on-chain.

What it doesn't do: it doesn't stop holders from dumping tokens into the pool, doesn't prevent minting if mint authority is active, and doesn't make thin liquidity deep. Many launchpads burn LP automatically when a token graduates — for example, Pump.fun tokens that complete their bonding curve.

//Option 2: Locking the LP tokens

A liquidity lock deposits the LP tokens into a locker contract (services like UNCX/Unicrypt and Team Finance are common on EVM chains) until a set date. During the lock, nobody can withdraw. After the unlock date, the owner can claim them back.

Strengths: lets a team keep control of the liquidity for the long term (for migrations or upgrades) while showing commitment now.

What to check:

• Unlock date. A one-month lock on a project asking for long-term trust is a short fuse. Many traders want six months or more; a permanent burn is stronger still.
• How much is locked. A lock covering 20% of the LP leaves 80% withdrawable.
• The locker itself. Confirm the LP sits in a known locker contract, not a wallet labelled "lock".
• Who can extend or withdraw. Read the lock details on the locker's page or explorer.

//Locked vs burned at a glance

//What a lock or burn doesn't protect you from

Locked or burned liquidity only rules out one kind of rug. It doesn't cover:

• Supply dumps. If insiders hold 40% of supply, they can sell it into the locked pool and take most of the paired asset anyway. See how to read top holders.
• Minting. An active mint authority lets the creator print new tokens and sell them. See mint and freeze authority.
• Honeypots and taxes. Contract traps work regardless of the pool. See honeypot tokens.
• Thin liquidity. A burned $15K pool is still a $15K pool. See why liquidity matters.

//Concentrated liquidity pools are different

On Uniswap v3/v4-style and other concentrated-liquidity DEXs, liquidity positions are NFTs or position accounts rather than fungible LP tokens. The same principle applies — whoever controls the position can remove it — but you check it differently: look for the position in a locker, or held by an address that can't act.

//How TrenchScore reports liquidity

The contract audit on each TrenchScore token page reports how much of the LP is locked or burned where the data is available, alongside liquidity depth, holder concentration and contract permissions. The TrenchScore weighs these together, because a burned pool with a 60% insider wallet is not a safe token.