4. Liquidity Lockups

Lockup modules address the liquidity instability that can occur when makers withdraw capital too quickly from early-stage markets. By enforcing minimum holding periods for maker positions, lockups help markets survive their vulnerable bootstrapping phase and transition toward sustainable liquidity depth.

Locked Maker Liquidity

During a market's early, bootstrapping phase, liquidity is typically shallow and concentrated among a small number of maker positions. Because of this limited participation, if several makers withdraw liquidity too soon, the impact on slippage can be significant. Early withdrawals can destabilize the market and make for volatile pricing. To help markets progress beyond this fragile phase, perps supports a lockup module that defines a mandatory lockup period for new maker positions. The lockup period is the minimum duration a maker position must remain open before it can be closed.

The lockup duration exposed by the module can be dynamic, allowing it to evolve with the market's maturity. For example, early-stage markets may enforce longer lockups to stabilize liquidity, while mature markets with deep liquidity can safely adopt shorter lockups, as individual withdrawals have less impact on slippage. Currently, the default lockup module enforces a static 7-day lockup period.

Pre-Expiration Liquidations

If a maker position becomes liquidatable before its lockup period expires, it may still be closed early. This rule prioritizes overall market safety and prevents locked liquidity from contributing to systemic risk. Importantly, a position's lockup is immutable once opened. A maker opening a position under a specific lockup duration is guaranteed that this duration is not unexpectedly increased while the position remains open.