Who is a Crypto Liquidity Provider?
A Liquidity Provider is a user who deposits cryptocurrencies with a Decentralized Application (dApp). The LP earns returns for the deposits. For example, by adding cryptocurrencies to a liquidity pool, LP can earn a pool share, interest, and other rewards.
Liquidity providers are essential to the functioning of Decentralized Exchanges (DEXs) as the application can facilitate exchange services smoothly using the available liquidity.
Related Terms
- Annual Percentage Rate (APR)
- Annual Percentage Yield (APY)
- Impermanent Loss
- Liquidity
- Liquidity Mining
- Liquidity Provider
Learn More Crypto Terms