noun Chemistry.
a highly concentrated, aqueous solution of potassium hydroxide or sodium hydroxide.
any solution resulting from leaching, percolation, or the like.

before 900; Middle English lie, ley, Old English lēag; cognate with Dutch loog, German Lauge lye, Old Norse laug warm bath. See lave1

lie, lye. Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2014.
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World English Dictionary
lye (laɪ)
1.  any solution obtained by leaching, such as the caustic solution obtained by leaching wood ash
2.  a concentrated solution of sodium hydroxide or potassium hydroxide
[Old English lēag; related to Middle Dutch lōghe, Old Norse laug bath, Latin lavāre to wash]

Collins English Dictionary - Complete & Unabridged 10th Edition
2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
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Word Origin & History

O.E. læg, leag, from P.Gmc. *laugo (cf. M.Du. loghe, Du. loog, O.H.G. louga, Ger. Lauge "lye"), from PIE root *lou- "to wash" (see lave). The substance was used in the old days in place of soap, hence O.H.G. luhhen "to wash," O.N. laug "hot bath, hot spring," Dan. lørdag,
Swed. lördag "Saturday," lit. "washing-day." Chamber-lye in the Middle Ages was the name for urine used as a detergent.
Online Etymology Dictionary, © 2010 Douglas Harper
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American Heritage
Science Dictionary
lye   (lī)  Pronunciation Key 
A strong alkaline solution or solid of potassium hydroxide or sodium hydroxide, made by allowing water to wash through wood ashes. It is used to make soap and drain and oven cleaners. Chemical formula: KOH or NaOH.
The American Heritage® Science Dictionary
Copyright © 2002. Published by Houghton Mifflin. All rights reserved.
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Example sentences
Corn kernels can be soaked in lye to produce hominy.
Lye is a caustic substance traditionally used to make soap.
Unfortunately, the police say, they did not wait long enough for the lye to
  burn off before they drank the brew.
It is combined with lye to make laundry detergent, and applied to wounds to
  speed healing.
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