What it means
Someone who deposits tokens into a pool so others can trade or borrow, in return for a share of the fees.
A provider takes on the pool's risks, including impermanent loss on a DEX and bad debt in a lending market.
How it works
Supplying EURC or USDC to a lending market makes you a liquidity provider.
Related terms
| Term | What it means |
|---|---|
| Liquidity pool | Tokens locked in a smart contract that people can trade against or borrow from. |
| Impermanent loss | What a liquidity provider gives up when the prices of the tokens in a pool move apart, compared with just holding them. |
| Lending market | An onchain pool where people supply money that others borrow, with the interest paid by borrowers going to those who supplied it. |
This glossary explains terms in general. It isn't investment, tax or legal advice.