Liquidity pools are crucial for peer-to-peer trading in DeFi. Liquidity is the ability of an asset to be sold or exchanged quickly and without affecting the price. In other words, liquidity is a measure of how easily an asset can be converted.

Traditional exchanges use order books:

Q: What if I want to buy/sell large amounts?

Problem 1: Price moves for several levels.

Problem 2: There may not be enough liquidity.

Why are liquidity pools useful?

• enable users to trade on DEXs
• eliminate middlemen and centralized entities
• Liquidity providers get incentives

Use Devnet Maiar DEX to be a liquidity provider:

1. Login with your wallet;
2. Go to Swap tab;
3. Swap 1 EGLD to USDC. Who provided the USDC for you to swap?
4. Go to Liquidity tab;
5. Add Liquidity: Use EGLD and USDC tokens;
6. Perform several swaps;
7. Remove Liquidity;
8. Compare tokens in (provided when added liquidity) to tokens out (obtained when removed liquidity). If swaps were made in between, you should have gained some value from fees.