LP Token
A token a liquidity provider receives as a receipt for their share of a liquidity pool. LP tokens can be redeemed for the underlying assets (plus accrued fees) and are sometimes themselves used in further yield strategies.
Mike Starr
Founder, CryptoWizardTools ยท M.S. Organizational Management
Last reviewed: August 2026
Related Terms
CeFi
Centralized Finance. Financial services that operate through centralized intermediaries such as exchanges or lending platforms, as opposed to decentralized protocols.
Max Supply
The maximum number of coins or tokens that will ever exist for a given cryptocurrency. Bitcoin has a max supply of 21 million BTC. Once the max supply is reached, no new coins can be created, making the asset deflationary by design.
Liquidity Pool
A collection of funds locked in a smart contract that provides liquidity for decentralized exchanges. Users who contribute to pools earn trading fees as rewards.
Impermanent Loss
The temporary loss experienced by liquidity providers when the price ratio of deposited assets changes compared to when they were deposited.
Satoshi
The smallest unit of Bitcoin, equal to 0.00000001 BTC. Named after Bitcoin's pseudonymous creator, Satoshi Nakamoto.