What is a liquidity token?

Liquidity provider tokens or LP tokens are tokens issued to liquidity providers on a decentralized exchange (DEX) that run on an automated market maker (AMM) protocol . Uniswap, Sushi and PancakeSwap are some examples of popular DEXs that distribute LP tokens to their liquidity providers.

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What is liquidity pooling?

by Avinandan Banerjee. Crypto Liquidity Pools are an essential part of the DeFi ecosystem. These pools are a collection of tokens or digital assets stored in a smart contract . These pools, among other things, help to facilitate decentralized trading and reduce the danger of washout.

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