Liquidity lock refers to a mechanism that prevents the withdrawal or selling of a cryptocurrency’s liquidity for a set period. This is primarily used to build trust among investors by ensuring that the project’s creators cannot pull out their liquidity suddenly, which could lead to a price crash.In many decentralized finance (DeFi) projects, liquidity is often provided through liquidity pools. To secure these pools, developers lock a portion of their liquidity tokens in a smart contract. The lock-up duration can vary, ranging from a few months to several years.By locking liquidity, projects aim to demonstrate commitment and stability. It acts as a safeguard against ‘rug pulls,’ where developers abandon a project and take the funds, leaving investors with worthless tokens. Hence, a liquidity lock can enhance investor confidence and promote a more stable trading environment. It is essential for investors to verify the terms of the lock and the credibility of the projects they are considering, as the assurance of locked liquidity can significantly influence investment decisions.