the benefit of adding liquidity in Crypto

1. What is the benefit of adding liquidity in Crypto? What is Liquidity? Liquidity in simple words is the ability of a coin to easily convert into cash or other coins. It is of vital importance for all tradable assets. When traders enter any market, they rely on the liquidity of market. Without available liquidity, it’s hard to buy and sell assets. What does adding liquidity do in crypto? A liquidity pool is a collection of tokens held in a smart contract, which is a self-executing programme based on the terms of the buyer and seller's agreement. The pool facilitates Crypto asset trading by offering liquidity to users. Liquidity refers to the ease with which one token can be traded for another. Crypto Liquidity Pool: Liquidity pool enables users to buy and sell crypto on decentralized exchanges and many other Decentralized Finance (DeFi) Platforms without requiring centralized market makers. A liquidity pool provides market liquidity to crypto traders and investors, in DeFi marketplaces. Crypto liquidity pools allow users to pool their assets in a DEX’s smart contracts to offer asset liquidity for traders to swap currencies; therefore it is important for Decentralized Exchanges (DEXs). Many decentralized finance (DeFi) platforms use automated market makers (AMMs), which allow trading of digital assets in an automatic and permission less manner through the use of liquidity pools. Most liquidity providers pool tokens upon the exchanges, from which they earn trading fees and crypto rewards . The provider is often rewarded with liquidity provider (LP) tokens when a user supplies a pool with liquidity. Low liquidity level means the presence of market volatility, which in turn causes spikes in crypto asset prices. Liquidity is considered to be “low”, if there are only a few market participants that are trading. This is known as an illiquid market.

2. Advantages of Liquidity Pool : Liquidity pool does not require a buyer and a seller to decide on the exchange of two assets for a given price. It rather leverages a pre-funded liquidity pool. Liquidity pools are the backbone of the AMM segment and are an essential earning tool for DeFi users. Liquidity pools facilitate decentralized lending and borrowing to other segments of DeFi, in addition to AMMs Liquidity pools make it easy to find a partner that values crypto just like you. Liquidity pools modify the value of crypto assets depending on the platform’s exchange rate. Rather than trades, exchanges happen. Liquidity pool has minimal market impact. A Liquidity Pool is a pile of assets locked in a smart contract and based on the exchange rates, the values are automatically updated. The absence of condition where sellers demand double the market price, or purchasers who want to discount it below average; makes the transaction much smoother now. PlatinX- One of the most reputed Liquidity Services Provider: PlatinX Technology is one of the best crypto liquidity services providers. We provide crypto assets and exchanges with multiple liquidity enhancement services. In addition to these, we also provide derivatives options to employ strategies for low-risk crypto users. If you want to grow your crypto token or exchange, then employ crypto liquidity services from PlatinX Technology today. To Know More visit - www.platinx.io