What is a Liquidity Pool

The liquidity of a financial asset refers to the speed with which the assets can be sold without negatively affecting its price. A liquidity pool is a crowd-sourced pool of cryptocurrencies or tokens locked in a smart contract that is used to facilitate trades between the assets on a decentralized exchange (DEX). Liquidity pools play an essential role in every crypto currency ecosystem. More specifically, this works by locking an adequate amount of tokens in a smart contract. This pool then enables cryptocurrency trading by ensuring that a trade can always take place at the market price. Without a healthy amount of liquidity in the IXT ecosystem, players could find it difficult to buy or sell IXT within the time frame they want.