Liquidity pools are the backbone of decentralized exchanges (DEXs), enabling seamless token swaps without the need for order books or centralized control. On iziSwap, liquidity pools are optimized with concentrated liquidity, allowing liquidity providers (LPs) to maximize their earnings while improving trade execution for users.

This guide breaks down how liquidity pools work on iziSwap and how you can benefit from them.

What Are Liquidity Pools?

Liquidity pools are smart contract-based pools where users deposit equal values of two tokens (e.g., ETH and USDT) to facilitate trading. Traders swap tokens directly through the pool, while LPs earn fees for providing liquidity.

iziSwap takes this concept further with concentrated liquidity, where LPs focus their funds within specific price ranges for higher efficiency and rewards.

How iziSwap’s Liquidity Pools Work

1. Adding Liquidity

• LPs deposit token pairs into a pool, enabling trades between the two tokens.
• Instead of spreading liquidity across all price ranges, iziSwap allows LPs to concentrate their liquidity where it’s most active.

2. Earning Fees

• Every trade within the liquidity pool incurs a small fee, which is distributed to LPs based on their contribution and price range.
• Concentrated liquidity ensures LPs earn more by focusing on high-activity price zones.

3. Adjusting Liquidity Ranges

• LPs can adjust their price ranges as market conditions change, ensuring their funds remain active and profitable.

How to Add Liquidity on iziSwap

Step 1: Connect Your Wallet 🔑

• Visit **iziSwap** and click “Connect Wallet.”
• Use MetaMask, WalletConnect, or Trust Wallet to link your wallet.

Step 2: Select a Pool 💼

• Navigate to the “Liquidity” section and choose a trading pair (e.g., ETH/USDT).