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  "id": "liquidity-provider-positions",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/liquidity-provider-positions/",
  "collection": "defi",
  "title": "Liquidity provider positions: what an LP token or NFT represents",
  "description": "Compare fungible Uniswap v2 pool shares with individual v3 positions, including inventory claims, accumulated fees and the effect of transfers.",
  "aliases": [
    "LP position",
    "liquidity receipt"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T18:17:57.897Z",
    "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-provider position records a claim on pool inventory and applicable fees. Uniswap v2 represents proportional pool shares with fungible LP tokens. Uniswap v3 positions have individual price ranges and are commonly managed as NFTs, so equal-looking position balances need not represent equal assets.",
    "claimId": "liquidity-provider-positions-quick-answer",
    "sourceIds": [
      "pair",
      "v3"
    ]
  },
  "keyFacts": [
    {
      "label": "v2 receipt",
      "value": "LP units determine a proportional withdrawal from current balances.",
      "sourceIds": [
        "pair"
      ],
      "id": "v2-receipt",
      "claimId": "liquidity-provider-positions-fact-v2-receipt"
    },
    {
      "label": "v3 position",
      "value": "Range and fee-tier choices distinguish positions.",
      "sourceIds": [
        "v3"
      ],
      "id": "v3-position",
      "claimId": "liquidity-provider-positions-fact-v3-position"
    },
    {
      "label": "Inventory",
      "value": "The underlying token mix can change without a new deposit.",
      "sourceIds": [
        "pair",
        "v3"
      ],
      "id": "inventory",
      "claimId": "liquidity-provider-positions-fact-inventory"
    }
  ],
  "prerequisites": [
    "liquidity-pools",
    "concentrated-liquidity"
  ],
  "sections": [
    {
      "id": "receipts",
      "heading": "A pool share represents changing inventory",
      "paragraphs": [
        "A simplified constant-product pool begins with 100 units of A and 10,000 of B. Ignoring fees, moving its A reserve to 80 implies 12,500 B to preserve the product of 1,000,000. A 10% share now corresponds to 8 A and 1,250 B rather than the original 10 A and 1,000 B.",
        "The LP’s claim percentage can stay unchanged while its asset mix changes. Concentrated positions add range dependence; a position outside its range can become entirely one asset. Evaluate the inventory and applicable fees together, not only the receipt-token count."
      ],
      "sourceIds": [
        "edition-uniswap-v2",
        "edition-uniswap-v3"
      ]
    },
    {
      "id": "individual",
      "heading": "Why concentrated positions are individual",
      "paragraphs": [
        "Two v3 providers can choose different ranges for the same pair. Their deposits then participate at different prices and can accumulate different fee amounts. A shared ticker cannot summarize those differences.",
        "The common v3 position-manager NFT identifies the position rather than a generic percentage of all pool inventory. To interpret it, read the tokens, fee tier, boundaries, liquidity and uncollected fees. An NFT here is a record of a financial position, not necessarily a collectible image."
      ],
      "sourceIds": [
        "v3"
      ]
    },
    {
      "id": "ownership",
      "heading": "Transfers and wrappers add another accounting layer",
      "paragraphs": [
        "Transferring a standard LP receipt transfers the represented claim; keeping a copy of its metadata does not retain the underlying withdrawal right. Depositing that receipt into another contract moves the immediate claim to that contract.",
        "A dashboard may show a wrapper token instead of the pool receipt. Follow the ownership and redemption chain until reaching the underlying assets. Include fees separately where the version does not automatically compound them into the position."
      ],
      "sourceIds": [
        "pair",
        "v3"
      ]
    }
  ],
  "faq": [
    {
      "question": "Is an LP token the same as a governance token?",
      "answer": "No. A pool receipt records a liquidity claim under pool rules. Governance authority is a separate mechanism, and the receipt’s appearance in a wallet does not by itself establish voting rights.",
      "sourceIds": [
        "pair"
      ]
    }
  ],
  "claims": [
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      "id": "liquidity-provider-positions-quick-answer",
      "articleSlug": "liquidity-provider-positions",
      "statement": "A liquidity-provider position records a claim on pool inventory and applicable fees. Uniswap v2 represents proportional pool shares with fungible LP tokens. Uniswap v3 positions have individual price ranges and are commonly managed as NFTs, so equal-looking position balances need not represent equal assets.",
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      "sourceLocators": [
        {
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          "locator": "mint; burn; swap; _mintFee"
        },
        {
          "sourceId": "source-f5705afc81647349",
          "locator": "Concentrated Liquidity; Active Liquidity; Non-Fungible Liquidity"
        }
      ],
      "scope": {
        "collection": "defi",
        "dataAsOf": null,
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
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        "checkedAt": "2026-10-02T18:17:57.897Z",
        "reviewer": "automated independent verification — DeFi content-pass reviewer",
        "notes": [
          "Read v2 Pair mint/burn pro-rata balance calculations and reserve invariant, and visually inspected v3 white paper concentrated-liquidity and fee/position sections.",
          "Recomputed 100*10000=1000000; at 80 A the fee-free invariant gives 12,500 B; a 10% share gives 8 A and 1,250 B. Matched the changed paragraph with existing v2/v3 receipt and NFT explanations."
        ]
      }
    },
    {
      "id": "liquidity-provider-positions-fact-v2-receipt",
      "articleSlug": "liquidity-provider-positions",
      "statement": "v2 receipt: LP units determine a proportional withdrawal from current balances.",
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      "sourceLocators": [
        {
          "sourceId": "source-5651ae58cdcb25c2",
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        "reviewer": "automated independent verification — DeFi content-pass reviewer",
        "notes": [
          "Read v2 Pair mint/burn pro-rata balance calculations and reserve invariant, and visually inspected v3 white paper concentrated-liquidity and fee/position sections.",
          "Recomputed 100*10000=1000000; at 80 A the fee-free invariant gives 12,500 B; a 10% share gives 8 A and 1,250 B. Matched the changed paragraph with existing v2/v3 receipt and NFT explanations."
        ]
      }
    },
    {
      "id": "liquidity-provider-positions-fact-v3-position",
      "articleSlug": "liquidity-provider-positions",
      "statement": "v3 position: Range and fee-tier choices distinguish positions.",
      "sourceIds": [
        "source-f5705afc81647349"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-f5705afc81647349",
          "locator": "Concentrated Liquidity; Active Liquidity; Non-Fungible Liquidity"
        }
      ],
      "scope": {
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        "checkedAt": "2026-10-02T18:17:57.897Z",
        "reviewer": "automated independent verification — DeFi content-pass reviewer",
        "notes": [
          "Read v2 Pair mint/burn pro-rata balance calculations and reserve invariant, and visually inspected v3 white paper concentrated-liquidity and fee/position sections.",
          "Recomputed 100*10000=1000000; at 80 A the fee-free invariant gives 12,500 B; a 10% share gives 8 A and 1,250 B. Matched the changed paragraph with existing v2/v3 receipt and NFT explanations."
        ]
      }
    },
    {
      "id": "liquidity-provider-positions-fact-inventory",
      "articleSlug": "liquidity-provider-positions",
      "statement": "Inventory: The underlying token mix can change without a new deposit.",
      "sourceIds": [
        "source-5651ae58cdcb25c2",
        "source-f5705afc81647349"
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      "sourceLocators": [
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          "sourceId": "source-5651ae58cdcb25c2",
          "locator": "mint; burn; swap; _mintFee"
        },
        {
          "sourceId": "source-f5705afc81647349",
          "locator": "Concentrated Liquidity; Active Liquidity; Non-Fungible Liquidity"
        }
      ],
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        "notes": [
          "Read v2 Pair mint/burn pro-rata balance calculations and reserve invariant, and visually inspected v3 white paper concentrated-liquidity and fee/position sections.",
          "Recomputed 100*10000=1000000; at 80 A the fee-free invariant gives 12,500 B; a 10% share gives 8 A and 1,250 B. Matched the changed paragraph with existing v2/v3 receipt and NFT explanations."
        ]
      }
    }
  ],
  "sources": [
    {
      "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": "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
    },
    {
      "id": "edition-uniswap-v2",
      "label": "Uniswap v2 whitepaper",
      "publisher": "Uniswap",
      "url": "https://app.uniswap.org/whitepaper.pdf",
      "locator": "Price oracle; Liquidity; Fees",
      "note": "Full-range constant-product inventory and cumulative-price oracle design.",
      "version": "Uniswap v2 whitepaper, March 2020",
      "checkedAt": "2026-10-02T17:03:45.008Z",
      "contentSha256": "32f8efd517767d8effb908e322df5ed1fe746ad0a3e642d49596cf2de1a6d21d",
      "recordId": "source-9d6f5c70415da83e"
    },
    {
      "id": "edition-uniswap-v3",
      "label": "Uniswap v3 whitepaper",
      "publisher": "Uniswap",
      "url": "https://app.uniswap.org/whitepaper-v3.pdf",
      "locator": "Concentrated Liquidity; Oracle",
      "note": "Range-based positions and oracle time accumulation.",
      "version": "Uniswap v3 whitepaper, March 2021",
      "checkedAt": "2026-10-02T17:03:45.213Z",
      "contentSha256": "1be05d1134f677dfbce9afa7392a2c200c000f3db74fb8d228e3636a2b624494",
      "recordId": "source-a0860b156550d3eb"
    }
  ],
  "related": {
    "articles": [
      "liquidity-pools",
      "concentrated-liquidity",
      "yield-vaults",
      "uniswap-v2-vs-v3"
    ],
    "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": "substantive-edit",
      "summary": "Expanded explanation: A pool share represents changing inventory. Worked examples are illustrative; source checks and independent verification are recorded separately."
    }
  ],
  "citation": "Degrees of Satoshi editorial project. “Liquidity provider positions: what an LP token or NFT represents.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/liquidity-provider-positions/"
}