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What is the name of the certificate received in return for providing liquidity to a liquidity pool on a dex?

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Question: What is the name of the certificate received in return for providing liquidity to a liquidity pool on a dex?

A liquidity pool is a collection of funds that are locked in a smart contract to facilitate trading on a decentralized exchange (DEX). Liquidity providers (LPs) are users who deposit their tokens into a liquidity pool and receive a proportional share of the pool's trading fees. In return for providing liquidity, LPs also receive a special kind of token called a liquidity provider token (LP token).


An LP token is a certificate that represents the LP's stake in a liquidity pool. It can be redeemed for the underlying tokens at any time, or used for other purposes such as farming, staking, or governance. LP tokens are unique to each liquidity pool and have different names depending on the DEX platform. For example, on Uniswap, LP tokens are called UNI-V2, on SushiSwap, they are called SLP, and on Balancer, they are called BPT.


LP tokens are not fixed in value or supply. They fluctuate according to the changes in the liquidity pool's size, composition, and fees. LPs can earn profits by holding LP tokens if the pool's fees exceed the impermanent loss caused by price movements. However, LPs can also lose money if the pool's fees are too low or the impermanent loss is too high. Therefore, LPs should carefully consider the risks and rewards of providing liquidity to a DEX.

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