Hackernoon logoThe Importance Of Liquidity In Decentralized Finance (DeFi) by@panosmek

The Importance Of Liquidity In Decentralized Finance (DeFi)

A liquidity pool is a collection of funds locked in a smart contract and used to facilitate decentralized trading, lending and more. Users called liquidity providers add an equal value of two tokens in a pool to create a market. In exchange for providing their funds, they earn trading fees from the trades that happen in their pool, proportional to their share of the total liquidity. Anyone can be a liquidity provider and automated market makes (AMMs) like Uniswap have made market making more accessible.
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@panosmekPanos

Founder of DigitalGen Financial Services. Focusing on financial and crypto education.

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by Panos @panosmek. Founder of DigitalGen Financial Services. Focusing on financial and crypto education.Read my stories

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