What is a Meteora LP token?
Last updated
Last updated
The Meteora LP (liquidity provider) token represents your share of the Dynamic pool after you have deposited liquidity. Every time you deposit liquidity into a Dynamic pool, you will receive an LP token. When you withdraw liquidity later, your LP token will be converted back to the underlying tokens, which will be your share of the pool including fees earned.
If you are adding liquidity to a Dynamic pool with farming rewards, you can stake (deposit) the LP tokens in the related farm for extra yield. When you choose to unstake and withdraw liquidity, your LP token will be converted back to the underlying tokens, which will be your share of the pool including fees earned. Farming rewards would have to be claimed separately.
The quantity of your LP tokens will not increase. The pool is compounding fees and growing, and the LP tokens are your share of the pool. If the value of the pool grows your LP tokens increase in value but they do not increase in quantity.
Formula to calculate the estimated $ value of your LP token
Lp_token_price (in $) = ((total_TokenA_balance * TokenA_price) + (total_TokenB_balance * TokenB_price)) / total_lp_supply
Note: total_lp_supply can be found in the LP mint address of the pool
Meteora's LP token works differently from the LP tokens from other DEXes. DO NOT burn your LP tokens on incinerator platforms, as that distributes your liquidity to all the other LPs in the pool and you lose access to those funds.
Special case: If it is a fairly new dynamic pool and you happen to be the one and only LP for that pool, after burning your LP tokens you can access your liquidity again by depositing some liquidity inside. However, please try not to burn your LP token in the first place.
For new memecoin / token projects: If you are a memecoin project that wants to permanently leave the liquidity in the pool (your lose this liquidity forever), we recommend these options:
Use Meteora to permanently lock your liquidity in your dynamic pool
After you permanently lock liquidity in the dynamic pool, you can even claim compounding trading fees from your locked liquidity, forever!
Streamflow: https://streamflow.finance/ - You can use streamflow to lock Meteora LP tokens for a period of time and also airdrop your community members/LPs through vesting if you want.
Guacamole's Liquidity Lockers: https://www.guacamole.gg/launch/lock
These are much better options than burning the LP token. It is much harder for your holders to verify on-chain that the liquidity is permanently locked if you burn the LP token.
Note: When you add liquidity for DLMM pools, you won't receive a Meteora LP token.
