Liquidity pool (DeFi)

A liquidity pool is a collection of funds locked in a smart contract^[2] that facilitates decentralized trading on automated market maker (AMM) platforms. These pools are essential components of decentralized exchanges (DEXs) like Uniswap, Sushiswap,^[3] and PancakeSwap,^[4] allowing users to trade digital assets without relying on a centralized order book. Instead, liquidity is provided directly by users, known as liquidity providers (LPs), who contribute equal amounts of two different tokens into a pool. In return for providing liquidity, LPs earn a share of the trading fees generated by the pool, proportional to their contribution.^[5]^[6]

References

^ "Pools". Uniswap.
^ "Liquidity Pools Explained: Simplifying DeFi for Beginners". Bitpay.
^ https://www.sushi.com/ethereum/swap
^ "What are Liquidity Pools in Crypto". Plena Finance.
^ Ringdorfer, André. "What are Liquidity Pools?". Heliswap.
^ K, Sankrit. "What Are Liquidity Pools and Crypto Market Liquidity in DeFi". CoinGecko.

[1] "Pools". Uniswap.

[2] "Liquidity Pools Explained: Simplifying DeFi for Beginners". Bitpay.

[3] ttps://www.sushi.com/ethereum/swap

[4] "What are Liquidity Pools in Crypto". Plena Finance.

[5] Ringdorfer, André. "What are Liquidity Pools?". Heliswap.

[6] K, Sankrit. "What Are Liquidity Pools and Crypto Market Liquidity in DeFi". CoinGecko.

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[2]

[3]

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[5]

[6]

See also

References