[6] Frozen LP Tokens

Immutable Liquidity for Ouronet SWP-Pairs

Example Link: F|P|OURO-VST|LP-98c486052a51

1. Purpose and Functionality

Frozen LP Tokens introduce an immutable liquidity solution, allowing SWP-Pair Owners to allow for the permanent lock of their liquidity, ensuring long-term stability within the liquidity pools. This mechanism mirrors the forever-lock model found on other DeFi platforms but in a more accessible and native format within the Ouronet ecosystem.

The Frozen LP Token mechanism allows users to participate in liquidity pools by locking their LP Tokens in an immutable manner, similar to how Frozen Tokens are used for other purposes, with added benefits to liquidity pools and the token ecosystem.

2. How Frozen LP Tokens Are Created

Once a Frozen Link is established for an LP Token within a SWP-Pair, the following steps occur:

  1. User Freezes their LP Token: Users holding an LP Token within the SWP-Pair can choose to freeze it by interacting with the Frozen Link, sending it to the Vesting Smart Ouronet Account for safekeeping.

  2. Frozen LP Token Creation: Upon freezing, the Native LP Token is kept in custody by the Vesting Smart Ouronet Account, and a Frozen LP Token is minted and issued to the user.

  3. Optional Pool Configuration: The SWP-Pair Owner may configure the pool to accept Frozen Tokens for liquidity provisioning. This allows users to add Frozen Tokens into the pool, creating frozen liquidity.

    • Example: If the pair is P|OURO-98c486052a51|VST-98c486052a51, users can freeze VST-98c486052a51, (provided a frozen Link is configure for the VST Token) but not OURO (if no Frozen counterpart exists for OURO).

    • If the pool is configured to accept Frozen Tokens, it can allow adding liquidity with frozen Tokens, generating Frozen LP Tokens for its user.

3. Integration with Frozen Token Liquidity Pools

When the Frozen Token mechanism is integrated into the liquidity pool:

  • Users may freeze their LP Tokens when interacting with the pool.

  • The SWP-Pair Owner has the option to enable Frozen Token usage, which facilitates frozen liquidity.

  • Once Frozen Tokens are added to the liquidity pool, they become locked permanently, and liquidity can no longer be pulled. The original assets are only accessible via market swaps or liquidity purchases, not through LP withdrawal.

4. Liquidity Process Overview

When Frozen Tokens are used for liquidity, the following sequence of events unfolds, all in an automatic manner:

  1. Frozen Token Burn: The user's Frozen Token (e.g., F|VST-Q3X8L2RRNWfk) gets burned.

  2. Custodial Recovery: The original DPTF token (e.g., VST-98c486052a51) is retrieved from the Vesting Smart Ouronet Account in an immediate manner.

  3. Liquidity Injection: The recovered original token is paired with its SWP counterpart (e.g., OURO) to add liquidity to the SWP-Pair.

  4. Frozen LP: The resulting Native LP Token is then automatically "frozen" (held in custody by the Vesting Smart Ouronet Account) effectively locking the liquidity in the pool indefinitely. The user receives the Frozen LP Token in return, which represents their liquidity, which is contributed in an immutable, permanent manner.

  5. The Frozen LP, as has been already described in the Frozen Token Sections, can never be used to retrieve the native LP, securing in this manner liquidity for the SWP-Pair in a permanent immutable way.

5. Benefits of Frozen LP Tokens

Feature
Benefit

🔒 Permanent Liquidity

Liquidity is locked permanently and cannot be removed.

🌊 Improved Pool Stability

Strengthens liquidity pool integrity and ensures unremovable depth.

🧱 DeFi Infrastructure

Enhances decentralized exchanges by anchoring liquidity with trustless assets.

🚀 Support for Long-Term Projects

Tokens and liquidity stay secured for long-term commitment, ensuring sustainable growth.

📊 Better Market Pricing

Reduces slippage and stabilizes price movements within the liquidity pool.

6. Key Characteristics of Frozen LP Tokens

Attribute
Description

🔒 Permanently Locked

Liquidity is locked, and LP tokens cannot be withdrawn from the pool.

🔁 One-way Burn Process

Frozen Tokens are burned, and the original tokens are used for liquidity.

💧 Adds to SWP Liquidity

Increases the liquidity of SWP-Pairs while maintaining permanent control over the added liquidity.

🛡️ Immutable

Once added, the liquidity cannot be altered, withdrawn, or removed.

7. Visual Lifecycle Summary

  1. User holds an LP Token of a given SWP-Pair.

  2. User decides to freeze the LP Token by interacting with the Sleeping Link.

  3. The native LP Token is sent to the Vesting Smart Ouronet Account for safekeeping.

  4. A Frozen LP Token is minted and issued to the user.

  5. The native LP Token can never be recovered, which is the main characteristic of the Frozen Functionality.

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