Published in · 2 min read · Dec 24, 2021
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Some projects choose to lock their liquidity while others prefer to burn it. The question of why is a complicated one to tackle. Today we are going to try to figure out which option is better.
A process when a cryptocurrency token is intentionally sent to an unusable wallet address to remove it from circulation is called Coin burning. The burn address can’t belong to anyone. Once a token is sent to a burn address, it’s gone forever.
In most cases, the developers of a cryptocurrency decide to burn a certain amount. Coin burning reduces the supply, making tokens of that cryptocurrency scarcer. That deficit can lead to an increase in price and benefit investors. Also, developers can burn LP tokens to avoid rug-pulls. By not having them they are no longer able to disarm the LP, which earns investor confidence.
- A cryptocurrency coin burn can be used to confuse investors. Developers can affirm to burn tokens when they’re actually sending those tokens to their wallet. To avoid this, it’s important to always do the research.
- Developers burn tokens to hide whales who hold large portions of a cryptocurrency. They can say that they own only 10% of the cryptocurrency, but by burning most of the tokens, they increase their percentage of ownership or other large investors.
- Developers burn LP tokens to avoid rug-pulls. But doing this, the developers do not take into account that the exchange may release an update or, for example, be scammed and it will be impossible to migrate liquidity to V2 due to burned tokens.
- Token burning isn’t guaranteed to increase the crypto’s value.
Instead of token burning developers can lock the liquidity forever with services like CryptEx locker. Locking forever has the same goals as burning tokens, but there are a number of advantages.
- Developers can always give a link to the lock, thereby proving their pure intentions. Lock information will be located on our website with all the information, which makes manipulation and fraudulent schemes impossible
- If the exchange releases an update or is scammed, we can migrate locked LP tokens to V2 without any problems with special mechanism, which is impossible if LP tokens are burned.
- If liquidity is locked forever with CryptEx locker, posts about it will be made in our social networks, as well as information on our website with high traffic.
To lock the liquidity visit https://cryptexlock.me/
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