DeFiBeginner

Liquidity pool

Assets held under a protocol’s rules to support activities such as swaps or lending.

PLAIN-ENGLISH DEFINITION

In more detail

A pool makes assets available for people to trade or borrow, depending on the protocol. Depositors usually receive a claim on their share or position, but its value and withdrawal conditions follow the pool's rules. Before treating a deposit like a savings balance, check what can change its asset mix and availability.

IN THE WILD

How you might use it

You deposit two tokens into a swap pool and later find that your position contains a different mix because traders have used the pool.

Liquidity pool — Shared assets. On-chain swaps. Original purple glass and lime illustration for Crypto Dictionary.
Illustrated by Crypto DictionaryAI-generated artwork

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By Crypto Dictionary · Published · Updated

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