Glossary
Liquidity Pool Meaning: What Does Liquidity Pool Mean in Crypto?
Definition
Smart contract containing funds for decentralized trading
Pools on Uniswap use constant product formulas; LPs earn fees but face impermanent loss, balancing yield against price risk. Mechanics: x*y=k formula. Fees: 0.05-1% per trade. TVL: Uniswap V3 ~$5B (2025). LP Tokens: Represent share, redeemable for principal + fees.