glossary ·

Liquidity pool

A DeFi pool where you deposit assets and receive LP tokens — deposits/withdrawals can each be taxable events.

Liquidity pool — crypto tax glossary (EN)

Liquidity pools let users deposit tokens to facilitate swaps, receiving LP tokens that represent a share of the pool.

Entering/exiting a pool, impermanent loss, and reward claims can create multiple tax events. LP token cost basis tracking is essential.

Educational definition — not tax advice. Rules vary by country.

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