Sense

🧾 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.