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I am new to DeFi.

I have read that:

LP token is an ERC-20 token you get in return for providing liquidity on Uniswap. You can think of it as a sort of IOU coupon or a receipt. In essence, the amount of LP tokens you were given represents the value of the money you put into the liquidity pool.

  1. Are Uniswap tokens LP tokens?
  2. And do you only get LP tokens when your liquidity is used? Or if I deposit $100 worth of eth do I get $100 worth of LP tokens? Or both?
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LP Token is just one name for the tokens you get, when you provide liquidity to a pool/pair, they may have other names, depending on where you read about them.

Uniswap tokens are something different, they allow you to vote on some things related to the future of Uniswap. They are listed at Coinmarketcap (currently #8) and may be traded at some Exchanges.

The LP tokens you get, when you provide liquidity to a pool/pair, can always be burned for your share of the both ERC20 tokens of the pair, so there is another LP token for every pair.

Because it is exactly clear what you can get for it, there is not really a need for them to be traded somewhere, because their price is perfectly defined by the amount of ERC20 tokens that are in the pool right now. So LP tokens would not be used by traders, because they can trade the ERC20 tokens, the pair is build on, directly.

There might be a own pool/pair, where you can buy or sell them directly for some LP tokens, because they are ERC20 tokens as well and nothing stops someone from setting up a pool for them (I don't know if there are, but it is technically possible).

When you deposit liquidity to a pool you should be careful to add both tokens around the same ratio as they are in the pool at that time, because otherwise you will get far less LP tokens (down to nothing in v2, when you only add one of the tokens and nothing of the other).

The formula (directly for the soucre code) for the amount of LP tokens you get is

Math.min(amount0.mul(_totalSupply) / _reserve0, amount1.mul(_totalSupply) / _reserve1);

where amount0/1 is what you deposit of token 0/1, _reserve0/1 is how many of token0/1 are in the pool right now and _totalSupply is how many LP tokens there are for the pair right now.

TL;DR

No, Uniswap tokens are not LP tokens, there is another LP token for every pair.

Providing liquidity is the main way you get LP tokens, for some LP tokens there might (technically possible) be a place (propably another Uniswap pool) where you can trade them. It is unlikely that they will be traded at a large central exchange.

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  • I now understand. Thank you.
    – YulePale
    Apr 4 at 8:45
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To clarify a little bit -- Uniswap (the app) has an associated governance token, UNI. This token is used to vote on proposals, among other things. LP (liquidity provider) tokens are different than UNI. These LP tokens are created when you add liquidity to the Uniswap protocol.

  1. See above description.
  2. Uniswap pools require you to deposit two assets. If you deposit $100 of ETH and another token into a Uniswap pair contract, you will receive $100 worth of that LP token. At a later time, you can redeem that LP token for your proportionate stake in that Uniswap pool. Please note that because of the way Uniswap is set up, you may get less money back than what you started with.
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    Are this LP tokens viewable on a place like coin market cap? Do they have a name? Also, can someone view the liquidity of a certain uniswap pair and see x amount token A and y amount token B in the liquidity pool? Thanks. I now understand what the UNI tokens are.
    – YulePale
    Apr 3 at 16:21
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    Yes, all of that is possible. The Uniswap Docs will answer most of your questions. Yes, you can view them like any other ERC20. They do have a price, but I am not sure CoinMarketCap shows it. Anyone can view liquidity. Apr 3 at 16:50
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    Thanks for the link to the docs. Will look at it. Where can someone view liquidity of a pair?
    – YulePale
    Apr 3 at 17:08
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    Info.uniswap.org is a good start Apr 3 at 18:12
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    Wenn you add $100 of (W)ETH you would also add $100 worth of the other token. When the price is at the same point as when you provided the liquidity, you will get back exactly the same (ignoring fees), so you actually get LP tokens worth $200 (at that time)
    – jjj
    Apr 3 at 20:39

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