Glossary · Infrastructure

What is Liquidity pool?

A liquidity pool is a smart contract holding two (or more) assets that anyone can trade against: put in one, take out the other, price set by the pool's ratio. Pools replaced order books as the default DEX mechanism because a contract cannot forget to fill you.

Depth is the whole game: a deep pool absorbs size without moving, a thin one turns your market order into the market. That is why routers split trades across pools and chains, hunting the ratio that leaves the most of your value intact.

Liquidity pool on U.CASH

The U.CASH swap routes across every pool it can reach on 34 networks, scanning depth and splitting routes so the quoted price is the settled price.

See also

DEX routingSlippage

Liquidity pool: FAQ

Who provides the liquidity?
Anyone who deposits assets into a pool and earns fees from the trades against it, from protocol treasuries to passive yield-seekers. Liquidity is crowdsourced; so is its depth.
Can a pool run out of one side?
No: the ratio just gets extreme, which is the pool's way of screaming a price. Arbitrageurs rebalance it toward the wider market, which is why pools track.
Keep reading

The glossary, A to Z

Every term behind the rails, the assets, and the settlement.