#DeFiBreakdown 2: Liquidity Pool.
08 Jul 2022, 11:25
#DeFiBreakdown 2: Liquidity Pool
Liquidity pools are the game-changing innovation in Decentralized Finance (DeFi) system that facilitates trading on Decentralized Exchanges (DEX). 💵🔁
Check out the infographics below👇 jot down notes 📕and improve your #DeFi knowledge with our visual guide.
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In a liquidity pool, 2️⃣ tokens are paired based on the constant product model, which utilizes the formula ✨x * y = k ✨to ensure a fair price!
Tokens' price is dependent on the tokens' quantity that's available in the trading pool.
Come see how they work!👇
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❓How different between liquidity pools and order book?
It can get a little or very confusing depending on your #DeFi knowledge.
Don't worry! We got you cover!
#CEX #DEX #LP
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While earning from swapping fees & yield farming💰, Liquidity providers are also in the face of several inherent risks including Impermanent loss, smart contract vulnerabilities or 'rug pull' risks.⚠️
The deep dive on Impermanent loss and how to avoid it will be released next!
$LUA #LuaSwap #LuaStarter
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