> ## Documentation Index
> Fetch the complete documentation index at: https://docs.inkyswap.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Permanent Liquidity (V1)

> How V1 handled liquidity through the bonding curve and Uniswap V2 LP burn.

<Warning>
  This page describes the V1 liquidity model. V2 uses a different mechanic. See [Bonding to Uniswap V4](/token-creation/bonding-to-uniswap-v4) for the current system.
</Warning>

## Two phases of V1 liquidity

V1 tokens went through two phases.

### Phase 1: Bonding curve

During the curve phase, there was no traditional liquidity pool. The `TokenFactory` contract held all ETH paid in and minted tokens out according to an exponential curve. Price was determined by the curve formula. There was no impermanent loss because there were no LPs.

|               |                                   |
| ------------- | --------------------------------- |
| Sale supply   | 800,000,000 (80 percent of total) |
| Target raise  | 3 ETH                             |
| Curve formula | `price = a * e^(b * x)`           |

### Phase 2: Uniswap V2 finalization

Once a token raised the 3 ETH target, the contract added liquidity to a Uniswap V2 pair and burned the LP tokens. From that point on the token traded on Uniswap V2 like any other token.

|                    |                                                   |
| ------------------ | ------------------------------------------------- |
| Liquidity supply   | 200,000,000 (20 percent of total)                 |
| LP burn            | 100 percent of LP tokens sent to the zero address |
| Trading after bond | Uniswap V2 pair                                   |

## Why LPs were burned

Burning the LP tokens removed the ability for anyone to withdraw liquidity. This made the pool permanent. No rug pull is possible because no one holds the LP, including the protocol.

## How to verify a V1 token bonded

1. Look up the token's Uniswap V2 pair on the [Ink explorer](https://explorer.inkonchain.com)
2. Check that the LP token balance of the burn address (`0x000000000000000000000000000000000000dEaD` or `0x0`) equals the total LP supply
3. Confirm the pair has ETH and the token in its reserves

## How V2 differs

V2 does not use Uniswap V2 or burn LP tokens. V2 bonds to a Uniswap V4 pool with a hook. The mechanic and the post bond fee model are different. See [Bonding to Uniswap V4](/token-creation/bonding-to-uniswap-v4).