Liquidity pools are the foundation of decentralized exchanges, enabling seamless token swaps without centralized intermediaries. On xexchange, liquidity pools are essential for keeping markets efficient, supporting the MultiversX ecosystem, and rewarding users who contribute their assets. For anyone exploring decentralized finance on MultiversX, understanding how liquidity pools work on xexchange is a key step toward informed participation.
This article explains what liquidity pools are, how they function on xexchange, how users earn rewards, and what risks should be considered before providing liquidity.
Liquidity pools are smart contracts that hold reserves of two tokens and allow users to trade between them.
Liquidity pools exist to:
Without liquidity pools, decentralized exchanges would not function effectively.
As the native decentralized exchange of MultiversX, xexchange depends on user-provided liquidity to operate.
Liquidity pools on xexchange: