The Rise of DEX Liquidity Pools

Traditional centralized exchanges have long dominated the world of trading, but decentralized exchanges have gained prominence by offering a decentralized and trustless environment for users to exchange digital assets. DEXs function without the need for intermediaries, enabling peer-to-peer trading directly from users' wallets.

Liquidity pools are at the heart of DEXs. These pools are created and maintained by liquidity providers who deposit their digital assets into smart contracts, allowing users to trade against these pools. Liquidity providers earn a portion of the trading fees generated by the platform in return for their contributions.