Features of liquidity pools
Guaranteed liquidity at every price level:Traders do not have to be directly connected to other traders, because liquidity is constant as long as customers have their assets invested in the pool.
Automated pricing enables passive market making:Liquidity providers actually deposit their funds into the pool and pricing is taken care of by the smart contract.
Anyone can become a liquidity provider and earn:liquidity pools do not need any listing fees, KYCs, or other obstacles linked with centralized exchanges. If an investor wants to provide liquidity to the pool, they will deposit the equivalent value of the assets.
Lower gas fees:The gas costs are reduced due to the minimal smart contract design offered by decentralized exchanges like Uniswap. Effective price calculations and fee allocations within the pool imply less volatility between transactions.
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