What are Pool Units or Native LP Tokens? | The Radix Knowledge Base

A Pool Unit is a type of native asset on Radix, similar to what is commonly referred to as a Liquidity Provider token, or LP token.

Liquidity pools are a concept used across the whole of DeFi. Users that participate in contributing to a liquidity pool receive a token that represents their proportional contribution. These tokens can be used to redeem a user’s share of a shared pool of other tokens, the pool.

On Radix, the system itself offers a native implementation of a flexible Pool component and a Pool Unit resources that is minted by that Pool. The Pool logic provides the core function of correctly managing contributions and redemptions and the supply of Pool Units – allowing the developer to define their own logic for how the Pool is used for their application (for example, the bonding curve for an AMM that uses the Pool for its liquidity). No more hoping that a developer has implemented liquidity pool logic correctly - the Radix platform guarantees this for you. And perhaps more importantly, no more wondering what your LP tokens are worth; the Radix Wallet can reliably look up and display the current redemption value of Pool Units with confidence that you can in fact redeem them for that amount.

The native Pool implementation includes three types for developers: one-resource, two-resource, and multi-resource Pools.

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