A token issued to liquidity providers representing their proportional share of a pool's reserves and accrued fees. LP tokens can be burned to withdraw the underlying assets. The value of LP tokens changes as the pool's token ratios shift and fees accumulate. LP tokens are often stakeable in yield farming programs for additional rewards.
Start with the shortest useful explanation before going deeper.
A token issued to liquidity providers representing their proportional share of a pool's reserves and accrued fees. LP tokens can be burned to withdraw the underlying assets. The value of LP tokens changes as the pool's token ratios shift and fees accumulate. LP tokens are often stakeable in yield farming programs for additional rewards.
Use the quick analogy first so the term is easier to reason about when you meet it in code, docs, or prompts.
Think of it as a market mechanic used to price, route, or move capital through liquidity apps.
Place the term inside its Solana layer so the definition is easier to reason about.
AMMs, routing, liquidity, lending, and trading infrastructure.
Turn the term from vocabulary into something operational for product and engineering work.
This term unlocks adjacent concepts quickly, so it works best when you treat it as a junction instead of an isolated definition.
Use this compact block when you want to give an agent or assistant grounded context without dumping the entire page.
LP Token (lp-token) Category: DeFi Definition: A token issued to liquidity providers representing their proportional share of a pool's reserves and accrued fees. LP tokens can be burned to withdraw the underlying assets. The value of LP tokens changes as the pool's token ratios shift and fees accumulate. LP tokens are often stakeable in yield farming programs for additional rewards. Related: Liquidity Pool, AMM (Automated Market Maker)
Use glossary context, relationships, mental models, and builder paths to get structured answers instead of generic chat output.
Optional: paste Anchor, Solana, or Rust code so the Copilot can map primitives back to glossary terms.
The Copilot will answer using the current term, related concepts, mental models, and the surrounding glossary graph.
These branches show which concepts this term touches directly and what sits one layer beyond them.
A smart-contract-held reserve of two or more tokens that enables trading via an AMM. Users deposit token pairs in specified ratios to become liquidity providers and earn trading fees. Pools are identified by their token pair and fee tier. Pool depth (total value locked) determines price impact for trades.
A protocol that enables token swaps using algorithmic pricing against pooled liquidity instead of matching individual buyers and sellers. AMMs use mathematical formulas (typically constant product x*y=k) to determine prices based on the ratio of tokens in a liquidity pool. On Solana, major AMMs include Raydium, Orca, and Meteora.
These are the next concepts worth opening if you want this term to make more sense inside a real Solana workflow.
These entries are easy to mix up when you are reading quickly, prompting an LLM, or onboarding into a new layer of Solana.
Token whose value is collateralized by a specific underlying asset held in reserve. Differs from algorithmic stablecoins in having a 1:1 real-world claim. USDC (fiat-backed), PAXG (gold-backed), and Ondo's USDY (treasury-backed) are examples.
A tokenized receipt representing restaked assets in protocols like EigenLayer, allowing users to maintain DeFi liquidity while earning restaking yields. When users restake LSTs via protocols like EtherFi (eETH) or Renzo (ezETH), they receive LRTs that can be used as collateral, traded, or deployed in additional DeFi strategies. LRTs reached $14 billion combined market cap by 2025.
Blockchain token representing a regulated financial security (equity, debt, fund share) subject to securities law. Requires KYC/AML, transfer restrictions, and regulatory reporting. On Solana, implemented with Token-2022's transfer hook and default account state extensions.
Glossary entries become useful when they are connected. These links are the shortest path to adjacent ideas.
A smart-contract-held reserve of two or more tokens that enables trading via an AMM. Users deposit token pairs in specified ratios to become liquidity providers and earn trading fees. Pools are identified by their token pair and fee tier. Pool depth (total value locked) determines price impact for trades.
A protocol that enables token swaps using algorithmic pricing against pooled liquidity instead of matching individual buyers and sellers. AMMs use mathematical formulas (typically constant product x*y=k) to determine prices based on the ratio of tokens in a liquidity pool. On Solana, major AMMs include Raydium, Orca, and Meteora.
These entries live beside the current term and help the page feel like part of a larger knowledge graph instead of a dead end.
A protocol that enables token swaps using algorithmic pricing against pooled liquidity instead of matching individual buyers and sellers. AMMs use mathematical formulas (typically constant product x*y=k) to determine prices based on the ratio of tokens in a liquidity pool. On Solana, major AMMs include Raydium, Orca, and Meteora.
An AMM design where liquidity providers concentrate their capital within specific price ranges instead of across the full 0-to-infinity range. CLMMs dramatically improve capital efficiency—LPs earn more fees per dollar deposited within their active range. If the price moves outside the range, the position becomes inactive. Orca Whirlpools and Raydium CLMM are leading implementations on Solana.
A smart-contract-held reserve of two or more tokens that enables trading via an AMM. Users deposit token pairs in specified ratios to become liquidity providers and earn trading fees. Pools are identified by their token pair and fee tier. Pool depth (total value locked) determines price impact for trades.
The exchange of one token for another through a DEX, either via an AMM pool or an order book. The user specifies an input token/amount and receives output tokens at the current market rate minus slippage and fees. On Solana, swaps settle in a single transaction (~400ms) with fees typically 0.01-0.3% per trade.