Solana Glossary
What Is a Liquidity Pool?
A liquidity pool is a smart contract holding token reserves that enables automated trading. Learn how LP pools work on Solana.
A liquidity pool is a smart contract that holds reserves of two tokens and enables automated trading between them. When you create a liquidity pool for your token paired with SOL, users can swap SOL for your token (buying) or your token for SOL (selling).
How Liquidity Pools Work
The pool uses a mathematical formula (automated market maker or AMM) to set the exchange rate based on the ratio of reserves. The most common formula is constant product: x * y = k.
When someone buys your token, they add SOL to the pool and receive your token. This changes the ratio, increasing your token's price. When someone sells, the opposite happens.
Liquidity Pools on Solana
Major DEXs on Solana include Raydium (CPMM and AMM V4), Orca, and Meteora. Each uses liquidity pools to enable trading.
Creating a Liquidity Pool
Create a Raydium liquidity pool on SolTokenCreator.io — choose CPMM or AMM V4, deposit your tokens + SOL, and trading begins immediately.
Create a Liquidity Pool
No coding required. Deploy to Solana in under 60 seconds.
Create a Liquidity Pool