The XRP Ledger has a built-in exchange. It can match a buyer with a seller, or route a trade through an automated market maker (AMM): a pool of two assets that is ready to trade at any time. The pool is recorded on the ledger, while websites and wallet apps provide a way to view it and submit trades.
Two ways trades can happen
The XRPL's order book works like a noticeboard. People post offers to buy or sell at a chosen price, and a trade happens when offers match. An AMM pool holds two assets instead. Its changing balances set a price, so a trader can swap without waiting for a particular person to accept an offer.
The ledger can use a pool, the order book or a route that combines them, depending on the available offers. A trading platform is an interface to these markets; it is not necessarily the exchange itself.
XRP
One side of the XRP / DROP pool.
The pool
Holds both assets and quotes a changing rate.
$DROP
The other side of the pair.
How a pool's price changes
When someone buys $DROP from the XRP / DROP pool, they add XRP and take $DROP out. With less $DROP left in the pool, the next buyer generally gets a different rate. Selling $DROP into the pool changes the balance in the other direction. The bigger the trade compared with the pool, the more it can move the rate.
The XRP / DROP pool is the project's main direct market. Other pools can pair $DROP with XRPL community tokens, creating other ways to trade between assets. Each pool has its own reserves and price.
How markets can move back into line
The same asset can have different prices in different pools or markets. Traders, including automated trading programs sometimes called arbitrage bots, may buy where it is cheaper and sell where it is more expensive. Those trades can move the prices closer together. They do not guarantee identical prices, and the process can also move prices down as well as up.
Adding liquidity
People who add assets to a pool are called liquidity providers, or LPs. On the XRPL, a deposit gives them LP tokens that represent a share of the pool. Returning those tokens in a withdrawal lets them take their share of the pool's current contents, which may differ from what they first deposited.
The pool receives trading fees. Because LP tokens represent a share of the pool, fees can increase the value of that share. The amount depends on trading activity and the pool's fee. Returns are not guaranteed, and price changes can leave an LP with less than if they had held the original assets. Read What is impermanent loss? before considering a deposit.
Locks, burns and withdrawal rights
LP tokens are the receipt for a share in a pool. Locking them generally means putting them somewhere they cannot be moved for a period or until a condition is met; the result depends on who controls the lock and its rules. While LP tokens are inaccessible, their holder may be unable to withdraw the represented share.
Burning LP tokens means destroying the receipt, or sending it somewhere it cannot be recovered. If nobody can use those tokens to withdraw, the corresponding share may become permanently inaccessible. That does not remove the assets from the pool, and a label such as “locked” or “burned” alone does not prove what withdrawal rights remain.
Burning issued $DROP is a different action: it affects that token's supply and says nothing by itself about whether pool liquidity can be withdrawn. A regular deposit does not automatically burn either token.
Check the asset before trading
Token names and logos can be copied. An XRPL token is identified by its currency code and issuer account, so check both before trading or adding liquidity. The issuer for authentic $DROP is shown on the How to buy page.
The Liquidity page lists the $DROP pools tracked by this site. The How to add liquidity guide explains deposits, LP tokens and withdrawals.