Liquidity Pool

A Liquidity Pool is a collection of tokens locked inside a smart contract
that makes trading possible on decentralized exchanges (DEXs) like Uniswap or PancakeSwap.

Instead of using an order book like traditional exchanges,
DEXs rely on liquidity pools where users provide tokens (like ETH + USDC)
so others can trade between them instantly.

How it works

• You deposit two assets of equal value (e.g. 50% ETH + 50% USDC).
• The pool uses a formula (like x * y = k) to set prices.
• Traders swap one token for another directly from the pool.
• You earn a small fee every time someone trades in that pool.

Why it matters

Liquidity pools are what make DeFi markets run 24/7 —
they remove middlemen, provide instant liquidity,
and let users become market makers themselves.

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💡 Lanzo Tip

Before adding liquidity, check for impermanent loss —
when token prices move apart, your share of the pool changes value.
Good for earning fees, risky if one side of the pair pumps 🚀