What are Liquidity Pools?
A liquidity pool is a collection of funds, typically two or more tokens, locked in a smart contract to provide liquidity for decentralized platforms. Liquidity pools enable decentralized trading, lending, and staking by allowing users to trade or earn yield without directly matching buyers and sellers. By removing the dependency on order books, liquidity pools ensure that trading can happen at any time, even for less liquid assets.
In automated market makers (AMMs) like Uniswap, Curve, and PancakeSwap, liquidity pools serve as the backbone, facilitating efficient token swaps through algorithmically determined pricing.







