What is a Liquidity pool?

A liquidity pool is a collection of crowdsourced coins or tokens that have been locked and stored in a smart contract, enabling the trading of assets on a decentralized exchange. The trading is facilitated because a liquidity pool is used as a mechanism to create liquidity on the platform. It is usually utilized by decentralized exchanges that incorporate an automated market-maker process to enable buying and selling of illiquid crypto pairs and decrease potential slippage.

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