Liquidity Pool

A liquidity pool is created when assets are locked in a smart contract for the purpose of providing liquidity. It uses Automated Market Makers (AMMs) / smart contracts to match buyers and sellers with set-price.

It is essential to have a continuous flow of liquidity — demand and supply of NFT — so that trades can happen continuously and efficiently, and liquidity providers are incentivized (with trading fees or profiting from bid-ask spread) by providing assets.

There are various kinds of liquidity pools to choose from on, depending on the inventory and objective of the liquidity provider:

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