liquidity pool
The term 'liquidity pool' is widely used in decentralized finance (DeFi) and traditional finance to describe a collection of assets aimed at facilitating trading and ensuring liquidity.
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Definition
C1Decentralized Finance
(technical, cryptocurrency)A collection of digital assets locked in a smart contract to facilitate automated trading on a decentralized exchange.
Example
- Users can earn rewards by contributing their tokens to a liquidity pool on a DeFi platform.
C1Traditional Finance
(technical, finance)A reserve of financial assets held to ensure sufficient liquidity for trading and meeting withdrawal demands.
Example
- The bank maintains a liquidity pool to handle large withdrawal requests efficiently.
Similar
Terms that have similar or relatively close meanings to "liquidity pool":