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12 mins
Beginner
Article

Understanding how liquidity pools work

Liquidity pools are one of the foundational technologies behind the current DeFi ecosystem. They are essentially pools of tokens locked in a smart contract. They are used to facilitate trading by providing liquidity and are extensively used by automated market makers (AMMs). Liquidity pools are the backbone of many decentralized exchanges. This course will help you understand how liquidity pools work, their advantages, risks, and how to participate as a liquidity provider.