What is liquidity pool farming?

Not to be confused as a derivative of Balancer, Bancor is one of the best liquidity pools in 2022, based on Ethereum. The platform leverages algorithmic market-making methods with smart tokens and offers liquidity alongside accurate pricing.

A liquidity pool refers to a pool of tokens that are locked in a smart contract, which is a self-executing program based on the agreements between the buyer and seller . The pool enables cryptocurrency trading by providing users with liquidity. Liquidity refers to the ease with which a token can be swapped with another.26 Oca 2022

The liquidity pool powers a marketplace where anyone can lend or borrow tokens . The usage of these marketplace incurs fees from the users, and the fees are used to pay liquidity providers for staking their own tokens in the pool. Most yield farming takes place on the ethereum platform.