# LP Token

> A receipt token you get for depositing into a liquidity pool. It tracks your share of the pool.

Canonical URL: https://fudfomo.co/glossary/lp-token
Source: What The Block! Dictionary v1.0 (last updated 2026-04-25), browsable at https://wtb.fudfomo.co.

## Definition

An LP token, short for liquidity provider token, is what a DEX gives you when you supply tokens to one of its pools. The LP token records the size of your share, including any fees that have accumulated.

You burn the LP token to withdraw your share of the underlying tokens. Some DeFi protocols accept LP tokens as collateral or pay extra rewards for staking them, which is one of the ways yield farming works.

## Related terms

- [Liquidity Pool](https://fudfomo.co/glossary/liquidity-pool): A shared pot of two tokens that lets people trade between them on a decentralised exchange.
- [DEX](https://fudfomo.co/glossary/dex): A decentralised exchange. Trade crypto directly from your wallet, without an account.
- [DeFi](https://fudfomo.co/glossary/defi): Decentralised finance. Apps that offer lending, trading, and saving on a blockchain instead of through a bank.
- [Yield Farming](https://fudfomo.co/glossary/yield-farming): Moving crypto between DeFi apps to earn the highest rewards. Higher yields usually mean higher risk.

## See the full catalogue

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