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  "id": "liquidity-pools",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/liquidity-pools/",
  "collection": "defi",
  "title": "Liquidity pools: shared inventory with different accounting rules",
  "description": "Understand what a liquidity pool holds, how a provider’s claim differs from the original deposit, and why pool size does not guarantee withdrawal.",
  "aliases": [
    "DeFi pool"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T15:08:18.373Z",
    "dataAsOf": null
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "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.",
    "claimId": "liquidity-pools-quick-answer",
    "sourceIds": [
      "pools",
      "pool"
    ]
  },
  "keyFacts": [
    {
      "label": "Exchange pool",
      "value": "A v2 LP claim covers a share of both current token balances.",
      "sourceIds": [
        "pair"
      ],
      "id": "exchange-pool",
      "claimId": "liquidity-pools-fact-exchange-pool"
    },
    {
      "label": "Lending pool",
      "value": "Borrowing removes available underlying assets from a reserve.",
      "sourceIds": [
        "pool"
      ],
      "id": "lending-pool",
      "claimId": "liquidity-pools-fact-lending-pool"
    },
    {
      "label": "Accounting",
      "value": "LP tokens identify claims rather than fixed deposit inventories.",
      "sourceIds": [
        "pools"
      ],
      "id": "accounting",
      "claimId": "liquidity-pools-fact-accounting"
    }
  ],
  "prerequisites": [
    "what-is-defi"
  ],
  "sections": [
    {
      "id": "two-pools",
      "heading": "Exchange and lending pools do different jobs",
      "paragraphs": [
        "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."
      ],
      "sourceIds": [
        "pair",
        "pool"
      ]
    },
    {
      "id": "share",
      "heading": "Calculate a simple proportional claim",
      "paragraphs": [
        "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."
      ],
      "sourceIds": [
        "pair",
        "pools"
      ]
    },
    {
      "id": "withdrawal",
      "heading": "Read the withdrawal mechanism",
      "paragraphs": [
        "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."
      ],
      "sourceIds": [
        "pair",
        "pool"
      ]
    }
  ],
  "faq": [
    {
      "question": "Is total value locked the same as trade depth?",
      "answer": "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.",
      "sourceIds": [
        "pair",
        "v3"
      ]
    }
  ],
  "claims": [
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      "statement": "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.",
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      "sourceLocators": [
        {
          "sourceId": "source-6f65e0d527a4f4eb",
          "locator": "Introduction; Pool tokens"
        },
        {
          "sourceId": "source-b35859a766315ce4",
          "locator": "supply; withdraw; borrow; repay; liquidationCall"
        }
      ],
      "scope": {
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      "evidenceStatus": "documented",
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        "notes": [
          "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."
        ]
      }
    },
    {
      "id": "liquidity-pools-fact-exchange-pool",
      "articleSlug": "liquidity-pools",
      "statement": "Exchange pool: A v2 LP claim covers a share of both current token balances.",
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      "sourceLocators": [
        {
          "sourceId": "source-5651ae58cdcb25c2",
          "locator": "mint; burn; swap; _mintFee"
        }
      ],
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        "notes": [
          "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."
        ]
      }
    },
    {
      "id": "liquidity-pools-fact-lending-pool",
      "articleSlug": "liquidity-pools",
      "statement": "Lending pool: Borrowing removes available underlying assets from a reserve.",
      "sourceIds": [
        "source-b35859a766315ce4"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-b35859a766315ce4",
          "locator": "supply; withdraw; borrow; repay; liquidationCall"
        }
      ],
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        "notes": [
          "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."
        ]
      }
    },
    {
      "id": "liquidity-pools-fact-accounting",
      "articleSlug": "liquidity-pools",
      "statement": "Accounting: LP tokens identify claims rather than fixed deposit inventories.",
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        "source-6f65e0d527a4f4eb"
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      "sourceLocators": [
        {
          "sourceId": "source-6f65e0d527a4f4eb",
          "locator": "Introduction; Pool tokens"
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        "notes": [
          "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."
        ]
      }
    }
  ],
  "sources": [
    {
      "id": "pools",
      "label": "Uniswap v2 pools",
      "publisher": "Uniswap",
      "url": "https://developers.uniswap.org/docs/protocols/v2/concepts/pools",
      "locator": "Introduction; Pool tokens",
      "note": "Two-token pools, proportional claims and changing token composition.",
      "version": "Uniswap v2",
      "checkedAt": "2026-10-02",
      "recordId": "source-6f65e0d527a4f4eb",
      "contentSha256": null
    },
    {
      "id": "pair",
      "label": "Uniswap v2 pair source",
      "publisher": "Uniswap",
      "url": "https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol",
      "locator": "mint; burn; swap; _mintFee",
      "note": "Reserve accounting, LP shares, fee-adjusted invariant and optional protocol fee.",
      "version": "v2-core v1.0.1",
      "checkedAt": "2026-10-02",
      "recordId": "source-5651ae58cdcb25c2",
      "contentSha256": null
    },
    {
      "id": "pool",
      "label": "Aave V3 Pool",
      "publisher": "Aave",
      "url": "https://aave.com/docs/aave-v3/smart-contracts/pool",
      "locator": "supply; withdraw; borrow; repay; liquidationCall",
      "note": "Pool operations, collateral restrictions and liquidation settlement.",
      "version": "Aave V3",
      "checkedAt": "2026-10-02",
      "recordId": "source-b35859a766315ce4",
      "contentSha256": null
    },
    {
      "id": "v3",
      "label": "Introducing Uniswap v3",
      "publisher": "Uniswap Labs",
      "url": "https://blog.uniswap.org/uniswap-v3",
      "locator": "Concentrated Liquidity; Active Liquidity; Non-Fungible Liquidity",
      "note": "Range-based liquidity, inactive positions and position-specific accounting.",
      "version": "2021-03-23 announcement",
      "checkedAt": "2026-10-02",
      "recordId": "source-f5705afc81647349",
      "contentSha256": null
    }
  ],
  "related": {
    "articles": [
      "liquidity-provider-positions",
      "defi-lending-pools",
      "concentrated-liquidity"
    ],
    "dossiers": [],
    "wallets": []
  },
  "revisionHistory": [
    {
      "date": "2026-10-02",
      "kind": "published",
      "summary": "First publication after primary-source research and independent automated verification."
    },
    {
      "date": "2026-10-02",
      "kind": "prepublication-review",
      "summary": "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."
    }
  ],
  "citation": "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/"
}