A liquidity pool is a pool of tokens blocked on a smart contract. The tokens are primarily used in decentralized exchanges or lending protocols. Users of the liquidity have access to it to carry out swaps or take loans. In turn, users who have provided tokens for a liquidity pool - liquidity providers - earn a share of the pool transaction fees, which is proportionate to their share of tokens in the pool.
What is a liquidity pool?
A short summary of how liquidity pools work
Written by Natalia
Updated over a week ago
Updated over a week ago