Why Decentralized Exchanges Are Important In The Crypto Economy


Liquidity pools not only provide traders with access to decentralized liquidity, but also provide investment opportunities for those who want to invest assets in the liquidity pool. When a user trades assets through a liquidity pool, a very small commission is paid to the people who provide the liquidity. To put this in common TradFi terms, those who contribute capital to the liquidity pools essentially earn a commission similar to that of a market maker. Liquidity funds, especially new ones, offer very high returns to investors. This concept is called yield farming and it provides income opportunities for those who understand the concept.