> For the complete documentation index, see [llms.txt](https://mayz.gitbook.io/mayz-whitepaper-v2/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://mayz.gitbook.io/mayz-whitepaper-v2/mayz-protocol/technical-document/general-aspects/liquidity-pools.md).

# Liquidity Pools

In the context of decentralized finance protocols (DeFi), a liquidity pool is a smart contract that receives tokens and delivers a receipt for that deposit called a **Liquidity Provider Token** or **LP token**. Liquidity pools in DeFi serve multiple functions, with their primary function being to facilitate the provision of financial services in a decentralized manner.&#x20;

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In this project, a liquidity pool is used to provide the service of an investment fund. In other words, a liquidity pool represents a set of tokens whose liquidity token serves as a share. Unlike a traditional investment fund, the assets are held by the smart contract and not by a third party.

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