@hananindra

🧾 What Is a Liquidity Pool? A liquidity pool is a system in the crypto world that enables automatic buying and selling of assets on a DEX (decentralized exchange) without intermediaries. 🍎 Analogy: Apple Seller Imagine you go to a market where there’s a seller selling apples at various prices ($1, $2, $3). Buyers can directly buy apples anytime. 🧑‍🌾 Liquidity Provider (LP) = Apple Seller LP deposits 2 assets, for example SUI and USDC, into the pool. This pool is like an automatic store that is ready stock to buy and sell anytime. 👥 Trader = Apple Buyer Traders come and swap SUI ⇄ USDC directly in the pool. No need to wait for another buyer, because the seller (LP) is already ready to buy back the apples (SUI) at any price. 💸 LP’s Profit Every transaction in the pool incurs a fee. This fee goes to the LP as passive income. So the more transactions, the bigger the LP’s earnings. ⚠️ Important Notes Impermanent loss: The asset value can change, sometimes causing losses.

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