Skip to main content
Learn

What Are LP Tokens and What Is Their Primary Function?

LP tokens are receipts representing a user's share of a liquidity pool, used to redeem the original deposit and accrued fees.
Greeks.Live17.11.25

What Are LP Tokens and What Is Their Primary Function?

LP tokens, or Liquidity Provider tokens, are receipts given to users who deposit assets into a DEX liquidity pool. They represent the user's proportional share of the total assets in the pool.

Their primary function is to allow the user to redeem their original deposit plus any accrued trading fees by "burning" (destroying) the tokens. In a rug pull, the developers' LP tokens are the key to draining the pool.

What Is the Role of the Liquidity Provider (LP) in a DEX’s Revenue Model?
What Is a ‘MEV-Share’ Protocol and How Does It Redistribute MEV?
What Is the Purpose of the ‘LP Token’ Received by a Liquidity Provider?
What Is the Role of a ‘Liquidity Provider’ in an AMM?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.