New concept in the Crypto world which tries to fill the gap of market makers.

Market makers are the institutions (bunch of people) who are willing to trade i.e. Buy or sell, irrespective of the high or low price.

When someone owns a Crypto coin and wants to trade it but not able to find the buyer or the right sale price for the coin, then they can use the liquidity pool to exchange the coin with different type of coins for which market is more liquid.

So, conceptually Liquidity pool is a basket in which liquidity provider has put 2 or more type of coins and when some one needs one type of coin then they can deposit the other type of coin in the pool for same value.

Example – I contribute BTC and ETH in a pool in same ratio of value. Now. if you hold ETH and want to sell it but cannot find the buyer or buyer at right price then you can deposit ETH to the liquidity pool and get BTC. Then you can sell BTC, if it has better market than ETH.

Liquidity pools can have more than 2 type of coins. There are liquidity pools which have 8 type coins in one pool i.e. if you hold any one coins of that 8 type, then you can exchange it against the other 7 coins.

What does the Liquidity provider gets ?

What is Farming, benefits and risks ?

Stay tuned, will be on the blog soon.

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