What Is the Role of a Liquidity Provider (LP) Token and How Does a DAO Treasury Manage Them?
An LP token is a receipt token issued to a Liquidity Provider (LP) upon depositing assets into an AMM pool. It represents the DAO's proportional share of the pooled assets and the accumulated trading fees.
A DAO treasury manages LP tokens by holding them as a yield-generating asset. They can also be used as collateral in other DeFi protocols, a practice known as "yield stacking," or be "burned" (redeemed) to withdraw the underlying treasury assets and fees.
