# Liquidity pools: shared inventory with different accounting rules 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. Evidence: [Uniswap v2 pools](https://developers.uniswap.org/docs/protocols/v2/concepts/pools); [Aave V3 Pool](https://aave.com/docs/aave-v3/smart-contracts/pool) Canonical: https://degreesofsatoshi.com/encyclopedia/liquidity-pools/ Published: 2026-10-02 Substantively modified: 2026-10-02 Independently verified by an automated reviewer: 2026-10-02T15:08:18.373Z AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied. ## Key facts - **Exchange pool:** A v2 LP claim covers a share of both current token balances. ([Uniswap v2 pair source](https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol)) - **Lending pool:** Borrowing removes available underlying assets from a reserve. ([Aave V3 Pool](https://aave.com/docs/aave-v3/smart-contracts/pool)) - **Accounting:** LP tokens identify claims rather than fixed deposit inventories. ([Uniswap v2 pools](https://developers.uniswap.org/docs/protocols/v2/concepts/pools)) ## 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. Evidence: [Uniswap v2 pair source](https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol); [Aave V3 Pool](https://aave.com/docs/aave-v3/smart-contracts/pool) ## 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. Evidence: [Uniswap v2 pair source](https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol); [Uniswap v2 pools](https://developers.uniswap.org/docs/protocols/v2/concepts/pools) ## 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. Evidence: [Uniswap v2 pair source](https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol); [Aave V3 Pool](https://aave.com/docs/aave-v3/smart-contracts/pool) ## Questions ### 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. Evidence: [Uniswap v2 pair source](https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol); [Introducing Uniswap v3](https://blog.uniswap.org/uniswap-v3) ## Claims and scope ### liquidity-pools-quick-answer 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: {"collection":"defi","dataAsOf":null,"blockHeight":null} ### liquidity-pools-fact-exchange-pool Exchange pool: A v2 LP claim covers a share of both current token balances. Scope: {"collection":"defi","dataAsOf":null,"blockHeight":null} ### liquidity-pools-fact-lending-pool Lending pool: Borrowing removes available underlying assets from a reserve. Scope: {"collection":"defi","dataAsOf":null,"blockHeight":null} ### liquidity-pools-fact-accounting Accounting: LP tokens identify claims rather than fixed deposit inventories. Scope: {"collection":"defi","dataAsOf":null,"blockHeight":null} ## Sources - [Uniswap v2 pools](https://developers.uniswap.org/docs/protocols/v2/concepts/pools) — Uniswap. Two-token pools, proportional claims and changing token composition. Locator: Introduction; Pool tokens. Retrieved: 2026-10-02. - [Uniswap v2 pair source](https://raw.githubusercontent.com/Uniswap/v2-core/v1.0.1/contracts/UniswapV2Pair.sol) — Uniswap. Reserve accounting, LP shares, fee-adjusted invariant and optional protocol fee. Locator: mint; burn; swap; _mintFee. Retrieved: 2026-10-02. - [Aave V3 Pool](https://aave.com/docs/aave-v3/smart-contracts/pool) — Aave. Pool operations, collateral restrictions and liquidation settlement. Locator: supply; withdraw; borrow; repay; liquidationCall. Retrieved: 2026-10-02. - [Introducing Uniswap v3](https://blog.uniswap.org/uniswap-v3) — Uniswap Labs. Range-based liquidity, inactive positions and position-specific accounting. Locator: Concentrated Liquidity; Active Liquidity; Non-Fungible Liquidity. Retrieved: 2026-10-02. ## Revision history - 2026-10-02: First publication after primary-source research and independent automated verification. - 2026-10-02: 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. ## Cite this entry 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/