WHAT IS LIQUIDITY POOL IN DEFILiquidity is a very important facet in the crypto token ecosystem.

What is liquidity pool in defi. The liquidity pool tool is used in various categories of DeFi projects such as decentralized exchanges or lending protocols. A liquidity pool is simply a blockchain-based smart contract thats programmed to hold the funds. In Defi economy there are multiple pieces which work together to help user trade their crypto fund and earn rewards these pieces are.

What is a Liquidity Pool. And many more liquidity pool lies at the core of each of these ideas. By offering liquidity they guarantee trade and are used widely by some of the decentralised exchanges.

Typically they hold two tokens and each pool indicates a new market for that particular pair of tokens. What are Liquidity Pools. The Foundation of DeFi Liquidity pools are the foundation of the DeFi ecosystem.

Over the past decades we have been using centralized exchanges and order books. DeFi platform Bancor took one of the first initiatives to include liquidity pools. Moreover it tries to resolve some specific issues that have been bugging the crypto community for a long time.

Bancor made one of the first initiatives to incorporate liquidity pools and Uniswap made it widely popular. You decide you want to contribute liquidity so you deposit an equal value of PJX and USDC to the pool. AMM Automated Market Maker Lending-Borrowing Protocols Yield Farming Synthetic Asset Blockchain-based games.

The value of the additional tokens in some cases can completely negate the value lost by impermanent loss making providing liquidity highly lucrative. In Decentralized Finance DeFi Liquidity pools are pools of tokens that are locked in a smart contract. What is a Liquidity Pool.