Liquidity Pooling. Part 1
Decentralized finance is continuing to disrupt both centralized cryptocurrency exchanges and legacy markets, with the defi sector accounting for a market capitalization of over $60 billion and daily volumes now exceeding $15 billion.
Popular defi platforms like Uniswap and SushiSwap have been a strong driver behind this growth, developing increasingly competitive decentralized exchanges (DEXes) as an alternative to the traditional order book model; made possible through liquidity pooling. Terminology in the defi space can seem baffling at the best of times but this is more straightforward in reality. So what exactly is liquidity pooling, and why is it useful?