What a liquidity lock is

When a token launches, someone deposits the token and a pairing asset into a pool so people can trade. Whoever provided that liquidity can normally take it back out. A liquidity lock stops them.

Where the liquidity comes from

A market for a new token does not exist on its own. Somebody has to put both sides into a pool: a quantity of the token, and a quantity of something people already want, usually ETH or a stablecoin. In return they receive a position representing their share of that pool.

In older designs that position is an LP token, an ordinary ERC-20 you hold in your wallet. In newer designs it is an NFT. Either way it is the claim ticket. Hand it back to the exchange and you get the pooled assets out.

What the lock actually prevents

Locking means putting that claim ticket somewhere it cannot be redeemed until a date. While it is locked, the person who provided the liquidity cannot withdraw the pooled assets, so they cannot remove the market from underneath everyone holding the token.

That is the whole of it. Pulling liquidity is the fastest way to make a token unsellable, and a lock removes that specific move from the table for a specific time.

What it does not prevent

• Selling tokens into the pool. A locked pool can still be drained of its valuable side by someone selling a large holding into it. The market stays open, and the price can still go to nothing.
• A lock covering only part of the liquidity. If half the LP is locked and half is not, the unlocked half can leave whenever it likes.
• Whatever the token contract can do. Minting more supply, taxing transfers or blocking wallets all still work on a token whose liquidity is locked.
• The day after it expires. A lock is a date, and dates arrive.

Locking versus burning the LP

Some teams burn the LP position instead, sending it to an address nobody controls. That is permanent rather than timed, so the liquidity can never be withdrawn by anyone, including them. It is a stronger commitment and it gives up the ability to migrate the pool later, for example to a new version of the exchange. Neither choice is automatically better, but a burn says more than a short lock. How burning works.

Liquidity locks on these chains

If a pool position is an ordinary ERC-20, Lockbox can lock it exactly like any other token: paste the pair address instead of the token address. If it is an NFT, as newer exchange designs use, it needs different handling and we do not support that yet. Check which kind your pool issues before planning around it.

Next: how to check whether a token's liquidity is actually locked, which is the same question from the buyer's side.