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  1. DeFi: Understanding Lending Protocols

Liquidity Pools (LPs)

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Last updated 2 years ago

A liquidity pool refers to a pool of tokens that are locked in a smart contract, which is a self-executing program based on the agreements between the buyer and seller. The pool enables cryptocurrency trading by providing users with liquidity. Liquidity refers to the ease with which a token can be swapped with another.

To better understand liquidity pools you can use the following resource from the Finematics channel on Youtube.