What is an LP token?
An LP token is a token a liquidity pool issues to represent your share of its reserves and accrued fees; redeeming it withdraws your underlying assets. In concentrated-liquidity pools the position is instead an NFT. LP tokens are also what gets time-locked to prove liquidity cannot be pulled.
An LP token is the receipt a liquidity pool gives you when you deposit. It records your share of the pool's reserves and the fees that have accrued to it; handing the LP token back to the contract burns it and returns your underlying tokens plus your portion of earned fees. In effect, it is a claim check on the slice of the pool you funded.
LP tokens are also what make liquidity locks possible. Since holding the LP token is what lets someone withdraw the pool’s liquidity, locking or burning those tokens is precisely how a project proves it cannot pull the rug. When you check whether a token’s liquidity is secured, you are really checking what has happened to its LP tokens.
Not every position uses a fungible LP token, though. Concentrated-liquidity pools like Uniswap V3 and V4 issue an NFT instead, because each position has its own custom price range and cannot be interchanged one-for-one. Sally works with both kinds across Base and BNB Smart Chain — classic LP-token pools and NFT-based concentrated positions — and its locks operate on the LP tokens that represent a pool’s liquidity, giving buyers a verifiable on-chain reason to trust that the pool stays funded.
LP token is part of how Sally works on Base and BNB Smart Chain. Put it into practice with the tool below.
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