What is a liquidity pool?

A liquidity pool is the shared reserve of tokens that a decentralized exchange trades against. In place of buyers and sellers posting orders, a pool holds two tokens in a smart contract, and every swap simply adds one token to the pool and takes the other out. The pool is always available to trade, which is what lets DEXes operate without an order book or a central market maker.

The tokens come from liquidity providers, who deposit both sides of the pair and in return earn a portion of the fees from every trade that passes through. This is how providers are paid for supplying the capital that makes trading possible. The flip side is exposure to impermanent loss when the two token prices diverge, so providing liquidity is an active decision rather than free yield.

Pool depth directly determines trade quality: deeper pools absorb large orders with less price impact, while thin pools move sharply on modest trades. Sally lets you add, view and manage liquidity positions on Base and BNB Smart Chain, including newer concentrated-liquidity pools, and it aggregates across many pools when routing swaps so trades find the deepest combined liquidity available.