Locked vs burned liquidity: what each one protects

"Liquidity locked" and "liquidity burned" are the two phrases every new token wants on its page. Both answer the same question: can whoever created the trading pool take it back? They answer it in different ways, for different lengths of time, and neither says anything about the token's other risks. This page explains what a pool and an LP token are, what locking and burning each do, what they leave open, and how to check the claim yourself instead of trusting a badge. The full routine for a new token, with all three checks, is in our guide on how to check a new token for a rug pull.

Pools and LP tokens in one paragraph

A decentralised exchange does not match buyers and sellers from an order book. It holds a pool of two assets, for example a new token and SOL or ETH, and lets anyone swap one for the other against that pool. Whoever deposits the two assets is a liquidity provider. In a Uniswap v2 pool, the provider receives liquidity tokens (LP tokens), which the Uniswap docs describe as representing "a given liquidity provider's contribution to a pool". Traders pay a fee on each swap; on Uniswap v2 a 0.3% fee goes to the providers in proportion to their share.

The part that matters for safety is the way out. To get the assets back, the provider returns the LP tokens to the pool and receives their portion of what is in it. Whoever holds the LP tokens can empty the pool. If the team that launched a token keeps them in an ordinary wallet, it can withdraw the other side of the pool at any moment, and the token is left with nothing to sell into.

A note on the word "burn". In the Uniswap docs, providers "burn" their liquidity tokens to withdraw: that burn is a redemption, and it gives the assets back. When a token page says the liquidity is burned, it means something else: the LP tokens were sent somewhere they can never be redeemed from.

Locked liquidity: safe until a date

Locking means the LP tokens are deposited in a locker, a smart contract that refuses to release them before a set time. Until then, nobody can redeem them, including the team. After that time, the contract lets the owner of the lock withdraw them, and the pool can be emptied as if it had never been locked.

What a lock depends on:

• The end date. A lock that ends next week protects you for a week. Always read the unlock time, not just the word "locked".
• Who owns the lock. Many lockers record an owner who can withdraw at the end, and some may let that owner extend the lock or hand it to another address. That owner is usually the team.
• The locker itself. Most locks sit in third-party locker contracts rather than in the token's own code. You are trusting that contract to behave as described. A lock in an unknown, unverified contract is a much weaker promise.
• How much is locked. If only part of the LP supply is in the locker, the rest can still be withdrawn today.

A lock is a reasonable choice for a team that wants to keep its liquidity long term and move it later, for example to a new pool version. It is a promise with an expiry date.

Burned liquidity: in place for good

Burning means the LP tokens are sent to an address that nobody controls, so they can never be returned to the pool. On Ethereum the usual destination is the address ending in dEaD; Etherscan labels it as an address "commonly used by projects to burn tokens". The zero address is used the same way. Nobody holds a key for either, so the share of the pool behind those LP tokens stays there permanently.

Some exchanges offer the same result as a built-in feature. Raydium's Burn & Earn on Solana is one: its docs explain that the LP tokens or position NFT are locked in a program-owned escrow, not destroyed, that "the liquidity can never be withdrawn", and that the trading fees keep accruing to whoever holds a separate Fee Key NFT. The effect for holders is the same as a burn: that liquidity is not coming out.

Two limits apply even to a perfect burn:

• It covers only what was burned. If the team burned half the LP tokens and kept the rest, half the pool can still be pulled.
• The pool can still drain through selling. A burn stops the liquidity being withdrawn. It does not stop anyone selling the token into the pool. Every sale takes out the other asset, so a large holder can empty most of the SOL or ETH side by selling, with the burned LP tokens untouched.

Locked vs burned at a glance

What neither one protects against

Locking and burning close one door: pulling the pool. A study of thousands of Uniswap tokens by Mazorra, Adan and Daza classifies several different malicious manoeuvres, and only some of them involve removing liquidity. The others work just as well with the liquidity locked or burned:

So read "liquidity burned" as one check passed, not as "safe". The mint and freeze authority and the top wallets are separate checks, and the rug pull guide shows how to run each one.

Concentrated liquidity changes the picture

Newer pool designs do not hand out interchangeable LP tokens. In Uniswap v3, liquidity is concentrated in a price range and called a position; each position is an ERC-721 token, an NFT, with its own range. Raydium's concentrated pools work the same way on Solana. That changes what you look for:

• There is no LP supply to add up. Instead of "what share of the LP tokens is burned", the question is who holds each position NFT that makes up the pool, and whether those NFTs are in a burn address, a locker or a wallet.
• A range can go dead. The Uniswap docs note that when the price leaves a position's range, its liquidity "is no longer active". A permanently locked position in a narrow range can end up providing no liquidity at the current price, even though it is technically still there. Raydium recommends full-range positions for Burn & Earn for this reason.

How to check it on-chain

You do not need to trust the token page or any badge. The facts are public:

1. Start from the contract address, never from the name or ticker, and open the token in a block explorer.
2. Find the pool. The explorer or the exchange's pool page shows the pool address and its LP token or position NFTs.
3. See who holds the LP tokens. On the LP token's holders list, a burn shows as a balance at a burn address; a lock shows as a balance in a locker contract; anything in an ordinary wallet can be withdrawn today.
4. For a lock, open the locker contract. Read the unlock time and the owner, and check that the contract's source is verified.
5. Add it up. Compare the burned and locked balances with the total LP supply, so you know what share is actually covered.
6. Then run the other checks: mint and freeze authority, top wallets and the contract's sell rules.

Whatever you find, the token sits in your own wallet once you buy it, so keep the keys to that wallet safe too: see self-custody 101. And if you follow new tokens through our memecoin week column, the same checks apply to the coins in it.

FAQ

What does burned liquidity mean?

It means the LP tokens for a pool were sent to an address nobody controls, or into an escrow that never releases them, so that share of the pool can never be withdrawn. It is permanent.

What does locked liquidity mean?

It means the LP tokens sit in a locker contract until a set date. Nobody can withdraw that share of the pool before then; after it, the lock owner can.

Is burned liquidity safer than locked liquidity?

For the single risk of the pool being withdrawn, yes: a burn has no end date and no owner. For everything else it changes nothing. A token with burned liquidity can still have an active mint authority, a sell block or a few wallets holding most of the supply.

Can a token with burned liquidity still lose most of its value?

Yes. Burning stops the pool being withdrawn, not the token being sold. Large holders can sell into the pool and take out most of the other asset, and the price can fall because buyers simply leave.

How do I check if liquidity is locked or burned?

Open the pool in a block explorer, find the LP token or position NFTs and see who holds them: a burn address, a locker contract with an unlock date, or an ordinary wallet. Then compare the covered amount with the total.