liquidityproviding
Liquidity providing is the act of supplying capital to a market to enable trading and reduce price impact. In traditional finance, liquidity providers are typically market makers who post quotes on an order book. In decentralized finance and other crypto markets, liquidity providing often occurs through liquidity pools managed by automated market makers, which allow traders to swap assets directly from the pool.
In an automated market maker pool, liquidity providers deposit pairs of assets (for example, token A and
Returns come from trading fees and sometimes incentive programs, but liquidity providing carries risks. The most
Beyond automated market maker pools, liquidity providers can also supply funds to lending pools in DeFi, earning