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Encyclopedia DeFi · Entry 51

Liquidity pools: shared inventory with different accounting rules

AI-assisted research · separate automated verificationCorrections

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DeFi
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4 cited records
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About 3 minutes
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In this article

At a glance

Key facts

Key facts for Liquidity pools: shared inventory with different accounting rules
FactDetailSource
Exchange poolA v2 LP claim covers a share of both current token balances.[2]
Lending poolBorrowing removes available underlying assets from a reserve.[3]
AccountingLP tokens identify claims rather than fixed deposit inventories.[1]
01

Exchange and lending pools do different jobs

The word liquidity can hide two mechanisms. In a swap pool, an incoming A payment buys B and changes the A:B inventory. In a lending pool, a borrower receives assets and incurs debt under collateral rules. Neither description alone identifies all the terms of a product.

A displayed total value also combines quantities using prices. It is not necessarily the amount withdrawable now, a count of independent users or a measure of trading depth at the current price.

02

Calculate a simple proportional claim

Suppose an existing exchange pool has 900 LP units and reserves of 90 A and 900 B. In a simplified proportional deposit, adding 10 A and 100 B mints 100 additional LP units. The new provider owns 100 of 1,000 units: ten percent of the pool. This ignores the special initial mint and integer rounding.

If swaps later change the pool to 80 A and 1,260 B, the same ten-percent claim corresponds to 8 A and 126 B. The LP units record a proportion, not a promise to return exactly the deposited 10 A and 100 B.

03

Read the withdrawal mechanism

A standard v2 withdrawal burns LP units for proportional balances. A lending withdrawal requires underlying liquidity and must also respect collateral constraints when the withdrawing account has debt. These are different reasons why a balance shown on a screen may not equal immediately available assets.

To interpret a pool, identify the underlying token contracts, receipt token or position record, redemption function and administrative restrictions. Two pools with the same ticker labels can have different code, chains and withdrawal behavior.

Direct answers

Questions people ask

Is total value locked the same as trade depth?

No. A total asset valuation does not express how output changes for a particular trade. Depth depends on the pricing curve and where liquidity is active.

Inspect the evidence

The answer and key facts have stable claim links. These records retain the scope and qualification when reused.

A liquidity pool is a shared set of assets governed by a contract. In an exchange pool, those assets are traded against a pricing rule; in a lending pool, available assets can be borrowed. A provider’s withdrawal rights and exposure depend on that specific pool’s accounting and restrictions.

Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.

Link to this claim
Exchange pool: A v2 LP claim covers a share of both current token balances.

Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.

Link to this claim
Lending pool: Borrowing removes available underlying assets from a reserve.

Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.

Link to this claim
Accounting: LP tokens identify claims rather than fixed deposit inventories.

Scope: DeFi. Verification: verified · 2026-10-02T15:08:18.373Z.

Link to this claim
Revision history
  1. — First publication after primary-source research and independent automated verification.
  2. — Before first publication, independent review checked and revised: faq, sources. Read v2 mint/burn and pool-token accounting alongside Aave supply/withdraw/borrow. Recomputed 100 newly minted LP units, ten-percent share, and later 8 A /126 B proportional claim. Initial-mint and rounding exclusions are explicit. Added v3 source to support the FAQ’s active-range distinction; TVL, trade depth, inventory claim and available lending cash are kept separate.

Source register

Sources and references

Retrieval dates and locators are recorded individually.
  1. Uniswap v2 poolsUniswap

    Two-token pools, proportional claims and changing token composition.

    Locator: Introduction; Pool tokens · Version / scope: Uniswap v2 · Retrieved: 2026-10-02Open source
  2. Uniswap v2 pair sourceUniswap

    Reserve accounting, LP shares, fee-adjusted invariant and optional protocol fee.

    Locator: mint; burn; swap; _mintFee · Version / scope: v2-core v1.0.1 · Retrieved: 2026-10-02Open source
  3. Aave V3 PoolAave

    Pool operations, collateral restrictions and liquidation settlement.

    Locator: supply; withdraw; borrow; repay; liquidationCall · Version / scope: Aave V3 · Retrieved: 2026-10-02Open source
  4. Introducing Uniswap v3Uniswap Labs

    Range-based liquidity, inactive positions and position-specific accounting.

    Locator: Concentrated Liquidity; Active Liquidity; Non-Fungible Liquidity · Version / scope: 2021-03-23 announcement · Retrieved: 2026-10-02Open source
How this article was made

Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.

Editorial method and corrections

Degrees of Satoshi editorial project. “Liquidity pools: shared inventory with different accounting rules.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/liquidity-pools/