What it means
Tokens locked in a smart contract that people can trade against or borrow from.
Liquidity providers fund the pool and earn fees from trades or interest from loans.
How it works
The bigger the pool, the less each trade moves the price.
Related terms
| Term | What it means |
|---|---|
| Liquidity provider | Someone who deposits tokens into a pool so others can trade or borrow, in return for a share of the fees. |
| AMM | Automated market maker: a DEX that prices trades with a formula over a pool of tokens, instead of matching buyers and sellers. |
| Liquidity | How easily a token can be exchanged or withdrawn without moving its price. |
This glossary explains terms in general. It isn't investment, tax or legal advice.