A shared pot of crypto tokens locked in a smart contract that enables trading on a decentralized exchange — users deposit tokens and earn fees in return.
Think of it like a community currency exchange booth where everyone chips in funds so travelers can swap currencies, and contributors earn a cut of every exchange.
Liquidity pools power decentralized trading and can be a way to earn passive income, but they come with risks you should understand first.
Watch out for pools with very low liquidity or unknown tokens — they're easier to manipulate and harder to exit without losing value.
A Decentralized Exchange — a platform where you trade crypto directly with other users through smart contracts, with no company in the middle.
The temporary loss in value you can experience when providing crypto to a liquidity pool, compared to if you had simply held those tokens.
Decentralized Finance — financial services like lending, borrowing, and earning interest, built on blockchain and available to anyone without needing a bank.
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