When you add liquidity to a Uniswap pool, you receive Liquidity Provider (LP) tokens. These tokens represent your share of the pool and accumulate fees automatically. They are ERC-20 tokens that can be transferred, sold, or used in other DeFi protocols. Many platforms allow you to stake your LP tokens for additional rewards, a process often called yield farming. This enables a double-dip earning strategy: fees from Uniswap and extra token incentives from another platform. Your Uniswap LP tokens are a key to unlocking layered DeFi profitability.
