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Tokenomics

LP Token

A token representing a share of an AMM liquidity pool. Burning LP tokens permanently locks the pool, eliminating the hard rug attack vector. Pump.fun automatically burns LP tokens at graduation — this is the protocol default, not a developer virtue signal.

See also
Tokenomics Liquidity Pool (LP) A smart-contract-held reserve of two assets that enables AMM trading. Pool depth determines price impact: shallow pools move more per trade than deep ones. The liquidity-to-MC ratio below roughly 5% is structurally thin — large sells move price dramatically and the depth visible on the chart may not be available at execution. → Security Hard Rug A rug pull executed by the developer directly withdrawing liquidity from the AMM pool. The liquidity disappears in a single block, the token price goes to zero, and there is nothing to trade against. Mechanically closed for Pump.fun-graduated tokens via automatic LP burn; still active on manually-deployed pools. → Tokenomics Graduation The transition from Pump.fun's bonding curve to a live AMM pool (PumpSwap since March 2025). Requires roughly 85 SOL in buy pressure; LP tokens are automatically burned. Approximately 0.63% of launches graduated in September 2025. Graduation is the minimum threshold of survival, not evidence of quality. →
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