Senior Engineer at Uniswap, Noah Zinsmeister, Explains Liquidity Pools


No welcome to the show. Thanks for having me jeff. You're on unit. Swap yuna swap is a liquidity pool. Can you explain what that means definitely so it uses some traditional financial words by a very traditional setting so what a liquidity pool is is a smart contract which is a piece of code that lives on the therion blockchain and this smart contract dictates how people can interact with it and the rules that people have to abide by if they want to participate with it and so a liquidity pool allows users to come to the table with some assets to assets in our case in sap and they can give those assets to the smart contract the smart contract then make them available for trading so other users can come to the smart contracts in one asset in exchange for another at some price and again the pool dictates both house. The user you know the price the user is getting when they're trading asset for us at be as the rewards and the you know the potential upside for the liquidity provider. And so there you know. There's there's fees that are being collected in the assets that are being traded and so those. Those fees accrue as additional tokens at the liquidity provider and then withdraw at a later date and so ultimately a liquidity smart contract. Where on the rules of the system are dictated not by an individual or an institution but rather just by code and then participants are free to interact with it in a way that they see fit.

Coming up next