A key concept in DeFi is liquidity provision. Simply put, liquidity providers lend their assets to decentralized exchanges, enabling fast and efficient trading. In return, they earn interest, often in the form of a percentage of the trading fees. By providing liquidity, investors can generate passive income, diversify their portfolios, and contribute to the overall health of the DeFi ecosystem.

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Absolutely! Liquidity providers are the backbone of DeFi, ensuring smooth trading and market efficiency. Their role in generating passive income while supporting decentralized finance is invaluable.