LP (Liquidity Pool) is a token given to the user by a decentralized financial platform, such as a cryptocurrency exchange or a loan service, for replenishing the liquidity pool. Moreover, the more the amount is provided to the platform for exchange, the more LP-tokens will be in return.
This is a kind of digital receipt that the liquidity pool owes certain money that was borrowed. You can withdraw liquidity at any time: LP-tokens will be withdrawn from the account, and in return you will get back the originally invested funds.
- Ease of use: unlike ordinary receipts tokens can be divided, preserving all properties.
- Additional income: LPs can be invested in farming pools.
- They can be donated, sold, etc.