Understanding Liquidity & LP Tokens

Liquidity refers to the pool of tokens available for trading on a DEX. On Squirrel Swap, liquidity is provided by users like you, who add tokens to liquidity pools in exchange for rewards.

What are LP Tokens?

When you provide liquidity on Squirrel Swap, you receive Liquidity Provider (LP) tokens in return. These tokens represent your share in the liquidity pool and can be used to redeem your portion of the liquidity at any time.

• LP tokens are a proof of ownership in a liquidity pool. If you contribute tokens to a pool, you receive LP tokens that reflect your stake in the pool.

• These tokens track your share of the pool's assets and can be redeemed for the underlying tokens whenever you want to withdraw your liquidity.

• The value of LP tokens fluctuates depending on the trading volume and liquidity pool activity.

By holding LP tokens, you’re entitled to a share of the trading fees generated by the pool, as well as other potential rewards like $SQRL or $SOL tokens.