LP tokens, or Liquidity Provider tokens, are issued to users who provide liquidity to a liquidity pool on decentralized exchanges (DEXs). When individuals combine their assets in a pool to facilitate trading, they receive LP tokens in return. These tokens represent their share of the pooled assets.The main purpose of LP tokens is to ensure that liquidity providers can reclaim their initial investment along with any fees earned from trading activities. When users want to withdraw their liquidity, they can return the LP tokens to the pool and receive their portion of the assets plus any accrued fees. LP tokens also allow providers to participate in governance and other activities associated with the specific DEX or protocol. Depending on the platform, they may also be used to earn rewards or yield farming opportunities, enhancing the potential returns for liquidity providers. Thus, LP tokens serve as both a receipt for deposited assets and a means to engage further in the protocol’s ecosystem.