What is the difference between a liquidity token and just a token and what is the difference between them when it comes to staking either of them?
if you enter your token in a pool as liquidity provider, you will get liquidity tokens, that will earn you interest, and you can exchange them latter for your original tokens
for Uniswap, it goes something like this:
- you have ETH in your wallet
- you want to add liquidity to, for example, ETH-LINK pair
- you exchange half of your wanted quantity of ETH coin for LINK tokens (you want to add equivalent of 1 ETH into the pool, you exhange 0,5 ETH for LINK)
- you approve your LINK token in Uniswap protocol pool
- then add ETH and LINK to the pool (as per current prices - for example 0,5 ETH and 17 LINK)
- based on your stake in the pool, you get UNI-V2 token for ETH-LINK pool, as this one
https://defimarketcap.io/token/0xa2107fa5b38d9bbd2c461d6edf11b11a50f6b974when you want to release your ETH and LINK, you go to Uniswap and in the ETH-LINK pool, you remove your liquidity