LP Token
DEX & liquidity
An LP token is a regular SPL token that an AMM mints to depositors as a receipt for liquidity. The amount you receive scales with your share of the pool. To withdraw, you burn the LP token and the program returns the underlying tokens plus fees. LP tokens are how classic AMMs like Raydium AMM v4 represent ownership.
Detailed explanation
On a constant-product AMM, when you deposit, the program mints LP tokens proportional to your contribution and the existing pool value. The first depositor sets the initial supply (usually sqrt(amountX * amountY)), and every subsequent deposit mints proportionally. Fees from swaps accrue inside the pool, so the value of each LP token grows over time even without rebalancing.
Raydium AMM v4 (program ID 675kPX9MHTjS2zt1qfr1NYHuzeLXfQM9H24wFSUt1Mp8) uses LP tokens. So does CPMM (program CPMMoo8L3F4NbTegBCKVNunggL7H1ZpdTHKxQB5qKP1C), classic Orca pools, and most launchpad migration targets. CLMMs replaced LP tokens with position NFTs because concentrated positions are not fungible.
LP tokens are first-class SPL tokens. They can be transferred, staked in farms, used as collateral, or wrapped. That fungibility is the whole point. The mint authority is usually a PDA owned by the AMM program, so only deposits and withdrawals can change the supply.
One opinion: most "yield calculators" for LP positions are wrong because they ignore impermanent loss. The LP token grows in quantity-of-pool-value, which is not the same as growing in USD terms. Build the calculator to track both.
LP tokens also surface in farm contracts and yield vaults. A farm typically takes the LP token as a deposit and emits a reward token over time. If you are indexing yield positions, you have to track both the LP token holdings inside the farm program and the underlying pool state, because the LP token quantity is constant while you are staked but its claim on the pool reserves drifts with every swap.
When you'll see this
Every classic AMM mint and burn touches an LP token. The Raydium AMM v4 instructions deposit and withdraw mint and burn the LP token directly. Pump.fun graduations create a fresh pool and distribute LP tokens to a configured authority before the pool opens to the public.
How NoLimitNodes uses this
Our Raydium Enhanced Stream parses every deposit and withdraw with the LP mint, the amount minted or burned, and the resulting share price. For a wider view across all AMMs, see our Enhanced Streams.
Related terms
- Position NFT · The non-fungible token that represents ownership of a CLMM liquidity position with its own price range.
- CLMM · Concentrated Liquidity Market Maker. LPs choose a price range, and capital only earns fees inside that range.
- DLMM · Dynamic Liquidity Market Maker. Meteora’s discrete-bin model with zero slippage inside the active bin.
- Whirlpool · The Orca CLMM pool account that stores the active sqrt-price, current liquidity, fee tier, and tick spacing.
- LB Pair · The Meteora DLMM liquidity-book account that stores the active bin, fee parameters, and the pool reserves.