Liquidity Pool

A liquidity pool is a reserve of two or more tokens held in a smart contract that traders swap against. The price shifts automatically as the ratio of tokens in the pool changes.

Related Terms

  • Automated Market Maker (AMM)

    An automated market maker (AMM) is a type of decentralized exchange that prices trades with a formula over a pool of tokens. It replaces order matching, so anyone can trade against the pool at any time.

  • Decentralized Exchange (DEX)

    A decentralized exchange (DEX) is a trading venue built from smart contracts, where users swap tokens directly from their own wallets. No company takes custody of funds, and trades settle on chain.

  • Liquid Staking

    Liquid staking lets holders stake tokens to help secure a proof-of-stake network while receiving a tradable token that represents the staked position. That receipt can be sold, lent or used as collateral.

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