@tothemoon-001
🎙️ Happy Sunday, my people!
I hope you’re chilling, relaxing, and letting that wallet breathe a little 😎🌞
It’s your favorite Web3 101 teacher back again, and today’s topic?
💧 LIQUIDITY POOLS EXPLAINED
Let’s break it down so even your neighbor wey still dey save for piggybank go understand 👇
What’s a Liquidity Pool?
Think of it like a big bowl of tokens. Users (aka liquidity providers) deposit two crypto assets (e.g., ETH & USDC) into this bowl, and these tokens are used by others to trade.
In return, the providers earn fees and sometimes rewards (APY 🔥).
WHY ARE THEY IMPORTANT?
🌀 They power DEXs (like Uniswap)
🌀 They remove the need for traditional order books
🌀 Anyone can become the “bank”
🌀 They make DeFi flow
BUT HERE'S THE KICKER:
⚠️ There’s something called impermanent loss
⚠️ If prices shift too much, you might earn less than just holding
⚠️ Some pools are more volatile than others.
More Web3 101 topics loading...
3 replies
0 recast
3 reactions