What LP burn means

At graduation, the Uniswap v4 LP position created with the bonding curve's accumulated ETH and PEG is burned, sent to the zero address (0x0000…0000). No one, including the peg.fun team, can ever withdraw that liquidity. It is locked in the pool for as long as the pool exists.

Why this matters

Without LP burn, a token's liquidity could be removed at any time by whoever controlled the LP position. That's the classic "rug pull", the team yanks liquidity, the price collapses, holders are left holding tokens with no exit.

LP burn removes this risk permanently:

  • The LP position is owned by the zero address.
  • The zero address has no private key.
  • No transaction can move that liquidity ever again.

This isn't a contract setting that can be flipped. It's the on-chain ownership of a real Uniswap v4 NFT position, transferred to a burn address at the moment of migration.

Every peg.fun token has permanent baseline liquidity after graduation. This is not configurable, not pausable, not reversible, it is enforced at the contract level at migration time.

What LP burn means for trading

The burned LP provides a permanent price floor. Even if every PEG holder sold simultaneously, the burned liquidity would still be in the pool, the token cannot reach a price of exactly zero while the pool exists.

The fees that the burned LP position generates from trading don't go to a traditional LP holder (there is none). Instead, peg.fun's hook routes those fees to the holder fee accumulator, distributed to PEG holders proportional to their balance-weighted activity. See How to claim holder fees for the mechanics.

What LP burn does NOT do

LP burn is not a price guarantee. It does not lock the token's price or prevent it from going up or down. The market still determines price via the constant-product AMM formula (x * y = k).

LP burn only prevents the liquidity itself from being removed by a third party. The token can still trade freely, prices can still fluctuate, and a determined seller can still push the price down by draining the curve through trades, but no one can ever remove the LP from the pool.

How to verify the burn

The LP burn is verifiable on-chain. The Uniswap v4 LP position is held at the zero address after migration. Anyone can verify this independently:

  1. Find the token's pool on BaseScan (Base block explorer).
  2. Check the pool's LP position owner.
  3. Confirm the position is owned by 0x0000000000000000000000000000000000000000.

If you want a UI shortcut, the token's detail page shows the migration status and a link to the on-chain pool record. The graduation event is also indexed and searchable.

Why peg.fun uses LP burn instead of timelock

Other launchpads use a timelock, the LP is locked for a fixed period (e.g, one year) then becomes removable. That model has two problems:

  1. The lock expires. Eventually the creator can remove liquidity.
  2. The timelock is opt-in. A creator can deploy without one.

peg.fun goes further: burn is mandatory and permanent. There is no opt-in, no expiry, no key to recover. The trade-off, the creator can't ever recover the LP either, is the price of the "permanent, eternal, rug-safe" liquidity narrative. See Risks for the long-form trade-off.