What is a liquidity pool in DeFi? A liquidity pool is a collective pool of funds from multiple users that is used to facilitate trading on decentralized exchanges. By providing liquidity, users earn a return in the form of trading fees, known as liquidity providers' revenue. This model has revolutionized trading in DeFi, offering high liquidity and competitive prices.

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Liquidity pools are a game-changer in DeFi, providing high liquidity and competitive prices. The fees earned by liquidity providers are a great incentive for users to participate and contribute to the pool.