Download to read offline
Uploaded bySimplilearn
What Is Liquidity Pool?
The document explores decentralized finance (DeFi) and liquidity pools, explaining that DeFi enables direct financial transactions without intermediaries. It discusses how liquidity pools allow users to pool their assets in decentralized exchanges, rewarding them for staking while contrasting this mechanism with traditional order books. Additionally, it outlines the pros and cons of liquidity pools, including the potential for fraud and benefits such as current market price transactions and decentralization.
What Is Liquidity Pool?
- 3. TOPICS TO EXPLORE WhatIs DeFi?
- 4. TOPICS TO EXPLORE WhatIs DeFi? What Is A Liquidity Pool?
- 5. TOPICS TO EXPLORE WhatIs DeFi? What Is A Liquidity Pool? Liquidity Pool vs. Order Books
- 6. TOPICS TO EXPLORE WhatIs DeFi? What Is A Liquidity Pool? Liquidity Pool vs. Order Books How Do Liquidity Pools Work?
- 7. TOPICS TO EXPLORE WhatIs DeFi? What Is A Liquidity Pool? Liquidity Pool vs. Order Books How Do Liquidity Pools Work? Regulations Of Liquidity Pools
- 8. TOPICS TO EXPLORE WhatIs DeFi? What Is A Liquidity Pool? Liquidity Pool vs. Order Books How Do Liquidity Pools Work? Regulations Of Liquidity Pools Pros And Cons Of Liquidity Pools
- 9. What Is DeFi (DecentralizedFinance)?
- 10. What Is DeFi? Decentralizedfinance or DeFi is a technology that eliminates intermediaries by allowing people, merchants, and businesses to conduct financial transactions through emerging technology Intermediaries People, Merchants and Businesses Decentralized Finance Financial Transactions
- 11. What Is DeFiLiquidity Pool?
- 12. What Is ALiquidity Pool? Liquidity pools are a mechanism by which users can pool their assets in a DEX's smart contracts to provide asset liquidity for traders to swap between currencies Users Digital Assets Smart Contract Swap Between Currencies LIQUIDITY POOL
- 13. Liquidity Pool vs.Order Books
- 14. Liquidity Pool vs.Order Books The ordered book and the matching engine are the primary components of any centralized exchange(CEX) USER ID - C ORDER ID - C FUND - 300 $ STAKE - 30 USER ID - B ORDER ID - B FUND - 200 $ STAKE - 20 USER ID - A ORDER ID - A FUND - 100 $ STAKE - 10 Order Of Funds Ordered Book Stored In Blockchain
- 15. Liquidity Pool vs.Order Books Liquidity Pools carries out deals directly on the blockchain without needing a central entity to retain the funds USER ID - C ORDER ID - C FUND - 300 $ STAKE - 30 USER ID - B ORDER ID - B FUND - 200 $ STAKE - 20 USER ID - A ORDER ID - A FUND - 100 $ STAKE - 10 Order Of Funds Ordered Book Stored In Blockchain Orders are directly stored in the Blockchain
- 16. How Do LiquidityPools Work?
- 17. How Do LiquidityPools Work? An average liquidity pool encourages and pays users for staking their digital assets in the pool. In exchanges where they pool their assets, rewards may be received in the form of cryptocurrency or as a portion of trading commissions Digital Assets Crypto Rewards Liquidity Pool Users
- 18. How Do LiquidityPools Work? Step 1: Go to SushiSwap
- 19. How Do LiquidityPools Work? Step 1: Go to SushiSwap Step 2: Find the BTC- USDT liquidity pool
- 20. How Do LiquidityPools Work? Step 1: Go to SushiSwap Step 2: Find the BTC- USDT liquidity pool Step 3: Deposit money to the BTC-USDT liquidity pool
- 21. How Do LiquidityPools Work? Step 1: Go to SushiSwap Step 2: Find the BTC- USDT liquidity pool Step 3: Deposit money to the BTC-USDT liquidity pool Step 4: Receive BTC-USDT liquidity provider tokens
- 22. How Do LiquidityPools Work? Step 1: Go to SushiSwap Step 2: Find the BTC- USDT liquidity pool Step 3: Deposit money to the BTC-USDT liquidity pool Step 4: Receive BTC-USDT liquidity provider tokens Step 5: Get the SUSHI token as a reward after the lockup period
- 23.
- 24. Regulation Of LiquidityPools To build a pool, the investment fund manager needs a license. A license for an investment fund is also required, regardless of the jurisdiction, wherever the pool is actively offered or promoted to clients Liquidity Pool Fund Manager License
- 25. Pros And ConsLiquidity Pool?
- 26. Pros And ConsOf Liquidity Pools Cons Pros Trades are executed at current market prices, simplifying DEX trading Decentralization is opposed by the fact that a small group controls the pool of wealth
- 27. Pros And ConsOf Liquidity Pools Cons Pros Trades are executed at current market prices, simplifying DEX trading Decentralization is opposed by the fact that a small group controls the pool of wealth Allows users to supply liquidity and get rewards Possibility of frauds like rug pulls and exit scams
- 28. Pros And ConsOf Liquidity Pools Pros Trades are executed at current market prices, simplifying DEX trading Decentralization is opposed by the fact that a small group controls the pool of wealth Allows users to supply liquidity and get rewards keeps security audit information open using publicly accessible smart contracts Possibility of frauds like rug pulls and exit scams The possibility of temporary loss Cons