What Is a Liquidity Pool?
Important keynotes
Liquidity pool is essentially a pool of tokens locked up using a smart contract.
Main purpose of a liquidity pool is to facilitate the trading exchanging time and provide liquidity.
Liquidity pool enhances fast exchange efficiency by cutting waiting time. ( no need for order book )
Liquidity providers ( LP ) receive a portion of the trading fee as an incentive for providing liquidity.
Trading on a centralized exchange like binance requires a trader to patiently wait for an order book to be filled before his/her open/pending trade will be filled this could be a limitation, buying/selling a low market cap token could be time-consuming sometimes a trader will need to wait for hours before having his opened trade will be bought by another trader.
Selling/buying a coin on any centralized exchange will always require another trader to buy such pending order if no one chooses to buy such an order your trade will be open/pending for days/hour till someone decides to buy.
The above illustration shows how trading on a centralized exchange could be time-consuming especially when trading a low market cap token.
With the inception of DeFi and integration of liquidity pools, these limitations were countered using Automated Market Maker ( AMM ) waiting time for buying/selling of tokens was eliminated, traders/investors can instantly exchange tokens of choice without the need for order book to be filled by another trader.
To participate or benefit from the liquidity pool interested users need to deposit trading pairs of crypto on the pool which are mostly in an equivalent portion.
By providing liquidity of either crypto pair let's say BNB-ETH a user will start earning from transaction fees completed using BNB-ETH this means whenever a trade is completed on the exchange platform using BNB-ETH the liquidity provider will earn a commission from the completed transaction.
Popular DeFi liquidity providing platforms like PancakeSwap and, Uniswap are typical examples of exchanges using liquidity pools.
RobiniaSwap a newly launched DeFi exchange platform allow users to provide liquidity on the platform pool and in return get rewarded for providing liquidity.
Crypto asset pairs like RBS-BNB, USDT-RBS, Bsteem-RBS, and more can be provided by liquidity providers to earn passive income from pools.
For more information about RobiniaSwap check out the links below
Website
https://robiniaswap.com/
Coinmarketcap
https://coinmarketcap.com/currencies/robiniaswap-token/
Coingecko
https://www.coingecko.com/en/coins/robiniaswap-token
RobiniaSwap Official Documentation
https://robiniaswap.gitbook.io/robiniaswap/
Discord
https://discord.gg/wGv4UjER2f
Greetings @mccoy02 undoubtedly the commercial exchanges offer us a range of possibilities, so the work being done from the Robinia group encourages us to continue supporting this valuable project. Thank you for guiding us in this regard, Greetings
Thanks for stopping by, Robinia use cases if fully utilize with maximum support form investors and users there will be a significant increase in RBS value for now we keep holding and buying more.
hello @mccoy02,
this is an interesting way to generate passive income, simply by giving liquidity to a market through liquidity pools, these pools are a great alternative to centralised exchanges like binance and more so now that nft games are more associated with decentralised wallets like metamask, the world of currencies is moving very fast, so keeping informed of how technologies work is essential.
Hi thanks for stopping by, sure by providing liquidity to a pool one generate passive income.
Information is power by educating ourselves we stay updated with current issues around the world world thanks much for your time.
Hi @mccoy02
Very well explained, the truth is that for many people this DeFi system is a kind of absolute mystery, and do not quite understand how it works.
Before there were many things I did not understand about this, I had to watch muxhos videos to gradually understand what it consisted of. Of course, there are many technical details that I don't know, but I enjoyed the reading.
Thanks
Hi, thanks for the feedback sure DeFi world is entirely a different space for crypto users to learn new things with time and gradually we get to understand how most things work here.
Greetings @mccoy02, excellent explanation on the Common Fund, thanks for sharing.
Thanks much for the feedback i'm glad this post is quite useful.
Liquidity of a coin will help us to determine how fast we can trade a coin on an exchange.
Liquidity help provide users with trading fee used for completing trades on decentralized exchanges.
Very good work, I congratulate you, a very simple and profound way at the same time to explain what is the purpose of the Common Fund.
excellent work, thank you for such a good job.
Thanks for the feedback do appreciate.
Thank you for the explanation, knowing the principles of operation of these DeFi platforms is very important because it allows us to have a vision of their differences with respect to centralized systems and how they can operate so fast and with less commissions.
Thanks much appreciate your feedback, decentralized exchanges makes it possible for all open transactions to be processed instantly by utilizing liquidity pool tokens.
As you rightly mention liquidity in a project is fundamental, the fact that the project is successfully maintained in the blockchain depends largely on it, the liquidity pool undoubtedly offers users the possibility to make these exchanges providing liquidity to the same project in reduction of waiting time and in favor of profits in equal portions. Thanks for the illustration and links to additional information.
Thanks for your time do appreciate the feedback i'm glad you find this post helpful best regards.
Greetings @mccoy, excellent explanation that you share with us, the truth before the RobiniaSwap project, DeFi systems were a complete mystery to me, but now I understand them quite well, thanks for the explanation.
Thanks much for the feedback i'm glad you find this post helpful.
The fact that Robiniaswap may be providing the same services as PancakeSwap and Uniswap is already very important for users who are just entering the world of decentralized finance.
Regards and thanks for sharing this valuable post.
Sure, with few DeFi out there RobiniaSwap will do great with time.