How to Make Passive Income with Liquidity Pools (VIDEO)

It’s an interesting time to be alive. With DeFi (decentralized finance) and cryptocurrency, there are more ways than ever to make passive income. Liquidity pools are yet another great opportunity to make money. Though it’s been around for years in other forms, definitely not like this. This post will introduce you to the nitty gritty of liquidity pools, followed by an engaging video by Finematics to explain the ins and outs even further.

What are Liquidity Pools?

Liquidity pools, in essence, are pools of tokens that are locked in a smart contract. Their purpose is to facilitate trading by creating more liquidity. Liquidity pools are used by many exchanges, centralized and decentralized. However, liquidity pools are often more used by decentralized exchanges (DEX).

The Players

During this year’s surging popularity of DeFi, one of the first platforms that introduced liquidity pools was Bancor. Bancor is a blockchain protocol that allows customers to convert a multitude of cryptocurrency tokens instantly into other tokens. This is often more popular than exchanging them on crypto exchanges like Binance and Coinbase. The Bancor protocol assists smart tokens in price discovery and continuous liquidity for cryptocurrencies. It does this by utilizing…