What is a liquidity pool?

A liquidity pool holds two tokens that traders swap against, instead of waiting for a matching buyer or seller in an order book. Liquidity providers deposit both tokens into the pool and earn the pool's fee on every swap that goes through it.

Because the pool is always there, a trade can execute at any time. Its price depends on how much liquidity the pool holds: the more liquidity, the less a trade moves the price.

Alcor Swap uses concentrated liquidity: each provider chooses a price range, and their liquidity is used only while the price stays inside that range. This lets liquidity sit where trading actually happens. See Alcor Swap for details.