Why Decentralized Exchanges Are Important in the Crypto Economy

Not only do liquidity pools offer traders access to decentralized liquidity, they also offer investment opportunities to those wishing to stake assets in the liquidity pool. When a user swaps assets through a liquidity pool, a very small fee is paid to the individuals who are providing the liquidity. To put this in common TradFi terms, those who contribute capital to the liquidity pools essentially earn a fee similar to that of a market maker. Liquidity pools, especially new ones, offer very high yields to investors. This concept is called yield farming, and provides income opportunities for those who understand the concept.

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