Definition
LP (Liquidity Provider)
In GambleFi, a liquidity provider deposits capital into a casino's bankroll and earns a share of the house edge, carrying the player variance in return.
In GambleFi, a liquidity provider is a user who deposits capital into a casino's bankroll pool and earns a share of the house edge in return. LPs collectively act as the house: their capital pays winning bets and absorbs losing streaks, and they collect the statistical profit over volume.
LP returns fluctuate with wagering volume and short-term player variance. The main risks are player variance drawing down the pool, smart contract risk, and withdrawal lock-ups.
Related: Casino Bankroll · House Edge