Liquidity pools have arrived as a new concept in the crypto domain. Let’s have a look at the list of best crypto liquidity pools in 2022.
Numerous advancements in the crypto landscape in recent times have introduced us to a new world of finance and technology. The world discovered an innovative approach for transforming conventional financial systems, often plagued with a diverse range of issues. For example, cryptocurrencies introduced decentralization, thereby removing intermediaries such as banks and other financial institutions.
As time progressed, new concepts such as liquidity pools made a formidable mark in the crypto domain. Therefore, the search for the best liquidity pools in recent times has some solid reasons. Liquidity pools are one of the hottest topics for anyone interested in crypto trading. However, the lack of awareness regarding the top crypto liquidity pools can serve as a huge setback. The following discussion outlines some of the top examples in a liquidity pool list for 2022.
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What is a Crypto Liquidity Pool?
Prior to an outline of the best crypto liquidity pools in the market right now, it is important to understand the concept of liquidity pools. What is the significance of liquidity pools in the continuously evolving crypto landscape? As the name implies, liquidity pools are collections of crypto tokens locked in smart contracts.
The liquidity pools help in carrying out trades between assets on a decentralized exchange, with the assurance of liquidity. The search for top liquidity pools has doubled up in recent times, primarily due to the value advantages they offer. First of all, liquidity pools offer the required liquidity alongside speed and convenience to the whole DeFi ecosystem. What is the importance of crypto liquidity pools? Is liquidity such a necessary requirement in the crypto landscape?
Significance of Crypto Liquidity Pools
Decentralized exchanges had to face the challenge of crypto market liquidity prior to the arrival of Automated Market Makers (AMMs). In the initial days of DEXs, they had to rely on the order book model for facilitating trades. Considering the limited number of buyers and sellers during that time, the order book model led to various inefficiencies. The entries in a liquidity pools list started growing primarily due to AMMs, which solved the problem of liquidity.
AMMs used liquidity pools for facilitating trades on DEXs while offering incentives to liquidity providers for committing their assets to liquidity pools. The tokens contributed by liquidity providers take away the need for any third-party intermediaries. More crypto assets in a liquidity pool obviously imply the capability of the pool to offer better liquidity. As a result, liquidity pools can facilitate easier trading on decentralized exchanges, thereby establishing proof of their significance.
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Top Entries among Crypto Liquidity Pools for 2022
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The answers to “What are the best liquidity pools?” would also revolve profoundly around their use cases. As liquidity pools present a proven alternative to the traditional AMM-based market models, they find applications in many areas. For example, liquidity pools are used for on-chain insurance, yield farming, blockchain gaming, synthetic assets, and borrowing-lending protocols. With such a dominant impact on the emerging DeFi ecosystem, many people are obviously eager to know more about the best liquidity pools in 2022. Here are some of the notable mentions in top crypto liquidity pools for 2022, with an outline of their key highlights.
Uniswap is one of the foremost entries in a liquidity pools list, especially considering its trading volume. The decentralized ERC-20 token exchange offers support for pairing Ethereum contracts and ERC-20 token contracts in a 1:1 ratio. It offers decentralization of trade between ETH and any other type of ERC-20 token. Uniswap has a competitive advantage in the fact that it operates an open-source exchange. The open-source exchange can help any individual in launching new liquidity pools for any token without any fees.
Another highlight of Uniswap as one of the best liquidity pools refers to the exchange fee of 0.3%. Liquidity providers get a share in the exchange fees, according to their share in the liquidity pool. When you offer liquidity to the platform, all you have to do is deposit crypto assets in return for Uniswap tokens.
The next addition to a top crypto liquidity pools list would obviously refer to Balancer. The Ethereum-based liquidity pool also serves as a non-custodial portfolio manager and price sensor. Users enjoy the flexibility of customizing pools alongside earning trading fees by subtracting or adding liquidity. The modular pooling protocol of Balancer serves as its foremost strength. It provides support for multiple pooling options, including private, smart, or shared pools.
Liquidity pool owners can only have complete authority for offering liquidity and adjusting parameters alongside making changes in the private pool. As compared to private pools, the settings and parameters of a shared pool remain fixed. Balancer introduced a liquidity mining facility in March 2020 by distributing BAL governance tokens to liquidity providers.
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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. Bancor maintains a constant ratio across different connected tokens alongside implementing modifications in the supply of tokens. The Bancor Relay liquidity pool introduces Bancor stablecoin, which helps in resolving the concerns of volatility in liquidity.
Bancor Relay’s liquidity pool takes away the need for native tokens to depend on BNT. Therefore, it supports liquidity pools with BNT tokens, ETH or EOS tokens, and the USDB stablecoin. Bancor is one of the top liquidity pools, especially for employing BNT to simplify data transfer between various blockchain networks with ETH and EOS blockchain networks. As compared to a fixed exchange fee, Bancor charges 0.1% to 0.5% of the transaction, according to the pool.
The search for answers to “What are the best liquidity pools?” will also take you to top choices like Curve. It is basically a decentralized liquidity pool based on the foundations of Ethereum and serves favorable opportunities for stablecoin trading. The value benefits of Curve Finance become clearly evident in the assurance of reduced slippage due to a non-volatile stablecoin.
Interestingly, Curve does not offer a native token, although a CRV token might not be far away. You can discover seven different pools on the platform, with their distinct ERC-20 pool pair. As a result, it supports swapping for different pools of crypto assets and stablecoins, which include Compound, sBTC, PAX, BUSD, and others.
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The name Convexity is also a prominent highlight in any liquidity pool list for 2022. It is also another decentralized liquidity pool, which offers a generalized foundation for tokens or fungible ERC-20 tokenized option contracts. The protocol supports users in the creation of collateralized option contracts followed by selling them as tokens.
On the other hand, Convexity protocol is comparatively new and includes only a few applications. However, you cannot help but notice the unique application of liquidity insurance in the Convexity liquidity pool. The facility of liquidity insurance provides assurance of security and confidence to liquidity providers and new traders.
Another noticeable example among top liquidity pools, DeversiFi, is one of the fastest crypto liquidity pools. The decentralized, non-custodial exchange offers the highest TPS or transaction per second, ranging up to 9000. DeversiFi utilizes a layer 2 scaling engine for offering such an exclusive value advantage of transaction speed. The striking functionalities of DeversiFi include the support for pooled liquidity pooling alongside near-zero exchanging fees due to transaction speed.
DeversiFi protocol supports public and private cryptocurrency wallets for depositing funds in the native DeversiFi STARKEX smart contract. Traders can leverage the smart contract for facilitating off-chain transactions alongside maintaining on-chain balance. The native token of the protocol, i.e., NEC, helps in carrying out these activities.
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When you search for the best liquidity pools, you cannot help but take a look at KeeperDAO. The Ethereum-based DeFi protocol works more or less like an on-chain DeFi underwriter. The KeeperDAO protocol provides financial incentives for participation, which results in effective liquidation management. In addition, it also rebalances applications across margin trading, exchanges, and lending protocols.
Deposits in the KeeperDAO liquidity pool account for a 0.64% fee, deducted from the asset provided in the pool. The KeeperDAO protocol offers five different liquidity pools for farming the ROOK tokens. The Keepers of KeeperDAO and JITU utilize liquidity offered by the five different pools for facilitating flash loans.
Kyber is indeed one of the best liquidity pools in 2022, primarily for the advantage of a better user experience. The on-chain Ethereum-based liquidity protocol enables dApps to offer liquidity. Therefore, vendors and wallets could easily help users in paying, swapping, or receiving many types of tokens in one transaction.
The native coin of Kyber Network, i.e., KNC, plays a crucial role in the liquidity pool. KNC token is an important highlight for rewards offered by the Kyber network alongside governance of the Kyber ecosystem. Therefore, users can stake their KNC tokens for participating in the governance of the ecosystem and earn returns according to the parameters of smart contracts.
A comparatively new name among the top liquidity pools, OIN Finance, brings some new highlights to the table. The most striking highlight of OIN Finance is the underlying Ontology blockchain. Interestingly, OIN Finance is the world’s first DeFi solution powered by this blockchain network. Users can explore a wide range of DeFi services on this new liquidity pool. The notable services on the liquidity pool include the wallet, stablecoin, lending applications, swapping, and DAO.
Owners of the utility token of OIN Finance can offer liquidity and profit along the lines of parameters associated with smart contracts. As of now, the information about other features of OIN Finance as one of the best liquidity pools remains in the shadows. The platform has recently raised almost $1 million in a single private transaction, and only two days later, the team started planning for a public offering.
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The final addition in the answers to “What are the best liquidity pools?” would point towards ICTE. One of the unique highlights of ICTE is the facility of inter-exchange trading. ICTE leverages a DeFi protocol, which facilitates connections between regional cloud-based exchanges across different blockchain networks.
The basic idea of connecting different exchanges with the ICTE liquidity pool focuses on reducing issues of security, custody, and latency. At the same time, ICTE offers the desired liquidity to all stakeholders and users on the platform. All exchanges on the ICTE platform run independently, albeit as a part of the worldwide ICTE Alpha server architecture.
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The growth of crypto liquidity pools presents favorable prospects for the overall growth of crypto and DeFi in general. Liquidity pools take away the need to wait for matching orders in crypto transactions. At the same time, the use of smart contracts in liquidity pools also ensures the facility for programming the best liquidity pools according to desired requirements.
Apart from addressing the concerns of crypto market liquidity, liquidity pools can open up the crypto and DeFi space to more users. New traders and liquidity providers can leverage liquidity pools to overcome issues of trust in cryptocurrency trading. However, it is important to identify the specific functionalities of different crypto liquidity pools before making a decision. Learn more about liquidity pools now.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!