LP Token
Receipt for your share of a liquidity pool - can be staked or farmed.
Depositing to a liquidity pool (e.g. ETH/USDC) gives you an LP token representing your share. Sell to close, use as collateral, or farm for extra rewards (yield farming). Some pools (Uniswap V3) use NFTs instead of ERC-20s. LP value grows with trading fees but suffers impermanent loss on big price moves.
In plain words
When you put two cryptos into a shared pot (pool) on a DEX, you get a receipt (LP token) saying my share is X%.
Example
Deposit 5k USD ETH + 5k USD USDC to Uniswap -> LP token. After a year: 11.2k value + 350 USD fees = +5.5%.
Also known as: liquidity provider token