In DEFI does each token-pair produce its own LP token?
Let us say I am in uniswap does each token pair produce its own LP pair when you provide liquidity or is it just one LP token regardless of the liquidity pool?
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1 Answer
Uniswap is an automated liquidity protocol powered by a constant product formula and implemented in a system of non-upgradeable smart contracts on the Ethereum blockchain. [...] Each Uniswap smart contract, or pair, manages a liquidity pool made up of reserves of two ERC-20 tokens. Anyone can become a liquidity provider (LP) for a pool by depositing an equivalent value of each underlying token in return for pool tokens. These tokens track pro-rata LP shares of the total reserves, and can be redeemed for the underlying assets at any time.
https://uniswap.org/docs/v2/protocol-overview/how-uniswap-works/
In brief: your LP tokens are "shares" of a particular LP. Therefore each LP (or token pair) produces its own LP token.
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1"your LP tokens are "shares" of a particular LP". That was the simple to understand explanation I was looking for. Thank you.– YulePaleApr 26, 2021 at 17:14
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If your LP tokens are "shares" of a particular LP can you see the total number of shares in an LP?– YulePaleApr 26, 2021 at 17:34
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1You can see how many LP tokens exist. For example for the UMA/ETH LP pool you'll find the total supply at etherscan.io/token/0x88d97d199b9ed37c29d846d00d443de980832a22 Knowing how many tokens you hold it's easy to get your share of the pool. Apr 27, 2021 at 8:35
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is a LP token for
(token1, token2)the same as for(token2, token1)? Are these pairs deemed identical in a LP? Mar 15, 2022 at 1:23