Liquidity pools

A fundamental component of decentralized finance (DeFi) platforms, liquidity pools are pools of tokens locked in a smart contract to facilitate trading by providing liquidity. They enable decentralized exchanges (DEXs) to function without traditional order book models, using automated market makers (AMMs) to determine asset prices. Liquidity pools primarily benefit users who participate as liquidity providers, earning a portion of trading fees, and traders seeking efficient and decentralized trading options.