Umi Digital Token Locks Polkaswap Liquidity using Ceres tools
Liquidity provided by Umi Digital in the UMI/XOR liquidity pair on Polkaswap will be locked using Ceres Liquidity Locker tool
What is liquidity?
When a market is created on Polkaswap, the liquidity provider deposits an equal value of two tokens to create a pair. This is because Polkaswap is decentralized exchange that works using a mechanism known as automatic market maker (AMM) where liquidity must be provided by a third party. Liquidity can be provided by anyone from the community, including developers, traders and investors. The liquidity may be redeemed at any time for an equal value amount of both tokens, based on the value at the time of redemption.
What is a liquidity locker?
The movement of the Polkaswap trading liquidity for a specific pair (in this example the XOR/UMI pool) is restricted by a time-based function. This means that once the restriction is set, they cannot be moved or withdrawn until the pre-selected time has passed.
Why lock liquidity?
This gives Polkaswap traders more confidence when buying or selling in the trading pairs that utilize a liquidity locker, because they know that for at least the next X months, the market must exist in some form and there cannot be a rug pull by the developers. Since the code of a contract is generally public, standards have been created, along with simple tools that anyone can use to verify the process was done correctly. Currently Ceres Liquidity Locker is the most popular method for teams to use on the SORA chain, and they provide a webpage where non-technical users can easily verify this was done.
If the Polkaswap pair you are trading does not use liquidity locking and is not listed on any centralized exchanges, you are always faced with the direct risk of the tokens value going to zero at a moment’s notice.
How much liquidity will be locked?
On Aug 21, 2021, 5:52:12 AM at block height #1553853 Umi Digital added
335.4 XOR and 297,915,757.7556608 UMI to the XOR/UMI liquidity pool on Polkaswap. There have never been any liquidity removals by the Umi Digital developers, which mean this liquidity has been unofficially locked since its inception. This is shown on the SORA blockchain where everything is transparent and fully traceable. At this moment approximately 50% of the total liquidity in the XOR/UMI pool is provided by Umi Digital and the remaining 50% is provided the by community. We believe this ratio is healthy and testament to decentralized nature of the Umi Digital project. The next liquidity provision will be injected into the Polkaswap XOR/UMI pool as per subject the Liquidity Release Schedule, when XOR/UMI Liquidity farming begins on SORA chain.
However now it is time to make an OFFICIAL liquidity lock announcement, all the liquidity provided by Umi Digital will be LOCKED FOR 12 MONTHS beginning on 23/05/2022!
This is in anticipation of UMI staking and XOR/UMI liquidity farming which will begin on SORA chain in the near future, details to be announced shortly.