> For the complete documentation index, see [llms.txt](https://docs.litedex.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.litedex.io/products-guide/exchange/liquidity-pools.md).

# Liquidity Pools

**Liquidity Pool** is a smart contract that lock the tokens of its users to ensure the token liquidity on Defi Exchange. Users who use this smart contract are called Liquidity Providers (LP). Liquidity Pool provides a smart contract consisting of two tokens to form a trading pair. For example LDX and USDT, here we assume the price of 1 LDX is 10 USDT. Liquidity Provider (LP) provides the same amount of two tokens, namely 1 LDX and 10 USDT, to create / add to the liquidity pool.


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