Liquidity Pool
A smart-contract vault of paired tokens that lets DEXs price and execute swaps without order books.
A liquidity pool is a contract holding two (or more) tokens that traders swap against, with price set by the pool’s ratio via an automated market maker formula. Liquidity providers deposit both assets, earn a share of swap fees, and accept impermanent loss risk in exchange.
Pools made permissionless markets possible — any token pair can have a market minutes after existing — and they’re a key metric of protocol health: deeper pools mean lower slippage. They’re also where rug pulls physically happen: a team pulling the pool’s paired asset leaves the token unsellable. Locked liquidity is the standard (partial) reassurance.