What are Liquidity providers in Crypto?
Meaning of Liquidity Provider Tokens The Automated Market Maker (AMM) system, used by decentralized exchanges, rewards liquidity providers with LP tokens, a notable cryptocurrency. Individual contributions to the total liquidity pool can be expressed using these LP tokens. PancakeSwap, Sushi, and Uniswap are well-known DEXs that give Liquidity Provider Tokens to their liquidity providers. Liquidity Provider Tokens, held in proportion to the liquidity pool's overall liquidity share, are used to track individual contributions to the entire liquidity pool. Who is a Liquidity Provider? A person that contributes their crypto assets to a platform to aid in the decentralization of trading is referred to as a liquidity provider, sometimes known as a market maker. In exchange, they receive fees from trades made on that platform, which can be viewed as passive income. It is crucial to remember that the provided assets are locked with the platform for however long the user chooses to suppl