Used in AMMs or DEXs like Uniswap, a liquidity pool is, as it sounds, a pool of crypto assets used to facilitate trades. A typical liquidity pool may consist of two assets, e.g. ETH and USDT. Yield farmers deposit equal parts ETH and USDT into the pool. In return they get LP tokens and yield. The pool acts as market maker, so if somebody wants to swap USDT for ETH, they deposit USDT into the pool and they withdraw ETH. This happens simultaneously via the smart contract. Any coin traded on a DEX lives or dies by a vibrant Liquidity Pool.
“The Wolf Game Liquidity Pool is fat at the moment. @beanie must be back.”« Dictionary Menu