Liquidity pool
A pair of tokens held by a smart contract that anyone can swap against.
Liquidity pool in more detail
On a decentralised exchange, or DEX, you do not trade with another person. You trade with a pool of tokens held by a smart contract.
A pool holds two tokens, for example ETH and USDC. Anyone can swap one for the other. The price comes from the ratio of the two tokens in the pool at that moment.
People called liquidity providers deposit both tokens, in equal value. In return they receive pool tokens that record their share. They can withdraw their share at any time.
All 128 terms · Checked against the lesson's sources on 10 October 2026.
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