Liquidity pools are token pairs where liquidity providers lend tokens. Providers deposit and lock liquidity within the pool, allowing token swaps to leverage existing liquidity reserves. Within a liquidity pool, there will be CRS Reserves and SRC Reserves, and the ratio of the two tokens forms the token price in AMM-based DeFi protocols.
Since liquidity pools are based on token reserve ratios, there is no order book and no limit orders. Based on the ratio of token reserves, the price of a token can be calculated. For example, in a liquidity pool with 10 CRS and 20 SRC tokens in reserves, 1 CRS would equal 2 SRC tokens or 1 SRC token would equal 0.5 CRS tokens.
transaction types
Liquidity pools primarily help to facilitate swap and liquidity provision based transaction types.
token swaps
Token swaps are transactions from one token to another. They incur a transaction fee, which is paid to liquidity providers and is the main function of a liquidity pool.
See Token Swaps for more information
liquidity provision
Liquidity provision is the provision or withdrawal of liquidity from a liquidity pool. These user-provided tokens are used to exchange from one token to another.
For more information, see Provision of Liquidity
staking pools
In the staking markets, liquidity pools have additional features to support governance staking.
At staking, governance tokens (ODX) are escrowed to vote on liquidity generation for the pool. Users who participate in staking receive 0.05% of the pool’s total 0.3% transaction fees.
See Stakeout for more information
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