How To

Explore our directory of ‘how to articles’, from setting up wallets to the latest user experience features available on the platform. We’ll continue to add to these over time to help those looking for practical tips to actively participate in the world of DeFi.


Find out about the macro events shaping the future of the Algorand Ecosystem. As blockchain technology pervades the mainstream consciousness, we’ll continue reporting on the social and economic moves driving the direction of the ecosystem.


Look for exclusive interviews with founders, panel discussions with important figures, documentary content following key projects, and insightful information to help you dive deeper into the world of Algorand.


Featuring rich content straight from the source, we’ll keep you across the latest developments, tracking projects as they deploy and continue to grow. From trending topics to breaking news stories, you won’t miss a thing.


Learn about Algorand and the projects being brought to life. Find out the answers to the inner workings of many of the Web 3.0 project developments happening on chain. Explore our knowledge directory to help you navigate and participate in the Future of Finance.


Discover how Decentralized Autonomous Organisations (DAOs) are replacing traditional organizational hierarchy. Using a set of rules written down in code, they’re bringing complete transparency to consumers. Investments are less at risk, and individuals can be more informed of the strategic business decisions as they’re made in real-time.


Algorand’s foundational technology is intentionally designed to support and include all asset types for the future of finance - including Non-Fungible Tokens (NFTs). With the explosion of NFT’s bringing in a new era of digital assets, follow along for the ride.


Decentralized finance (DeFi) is disrupting the financial landscape as we know it, making financial applications more accessible and inclusive. Learn about how Algorand’s many applications, features, and use cases are enabling projects to leverage the core principles and value of decentralized technology to define the future of finance.

Algorand Foundation

With a primary goal of promoting broad participation and decentralization of the network, the Algorand Foundation is helping make the borderless economy a reality. See how this decentralized ecosystem enables the Algorand community to shape the shared future of the Algorand network.


By the end of 2022, it’s expected there will be over 700 active projects on the network. Algorand’s speed makes it ideal for many real-world applications and has many successful use cases across DeFi, NFTs, and decentralised gaming applications. Read up on some of the key factors unique to this next generation protocol.

What is a Liquidity Pool and How Does it Work?

Liquidity pools are one of the key elements of the decentralized space, and automated market makers, yield farming, borrow-lend protocols, and even blockchain gaming all make use of them. With centralized exchanges rising in volume and facilitating more than 95% of cryptocurrency transactions, Decentralized exchanges had to step up to compete; this is the reasoning behind the advent of one of DeFi’s core products, the liquidity pool.

A liquidity pool is a set of digital assets that are locked in smart contracts to facilitate trading and lending on decentralized exchanges. Liquidity pools are the rock of many DEXs, such as Pancakeswap and Uniswap. These pools provides liquidity to DEXs and creates price levels that are not dependent on market forces; they also contain ERC-20 tokens.

The Difference Between a Liquidity Pool and Order Books

To better understand what liquidity pools are, you need to fathom how CEXs are able to match trading orders. CEXs do this through order books. The order book is a collection of the recent open orders for a given market, which functions alongside the matching engine—a system that matches orders and is at the core of centralized exchanges. This model facilitates effective exchange and allows for the creation of financial markets; however, this poses a problem. DeFi trading entails executing on-chain trades without a centralized party to hold the funds. This makes interaction with the order book expensive and more complicated to execute trades.

How Liquidity Pools Work

Liquidity pools have changed the way on-chain trades are executed as you no longer need order books to determine orders. Since there is no direct counterpart, traders can get in and out of trading positions on pairs that would have been illiquid on order books. In summary, order books connect buyers and sellers but only facilitate the trading of popular digital currency pairs, while liquidity pools connect buyers with a contract. When executing a trade on an AMM, you are executing the trade against the liquidity pool, so buyers do not buy from sellers at that moment. Pricing is determined by an algorithm based on the trades happening in the pool.

Benefits of Liquidity Pools

The main benefit of the liquidity pools is that it does not require the buyers or sellers to decide the market prices of a given pair. Once funded, the pool allows for trades to occur at any time with limited slippage, even for the most illiquid pair, providing the liquidity pool is large enough. The funds locked in the liquidity pool are provided by users who are also known as liquidity providers. These people could be crypto enthusiasts, traders, or investors. They add an equal value of two tokens in the pool to form a market, and they earn passive income on their liquid deposits in exchange through trading fees that are in accordance with the percentage offered by the protocol. Sometimes, these protocols give out tokens as rewards, which can be traded on DEXs and CEXs.

Written by

Oluwapelumi Adejumo

Stay up to speed on all things Algorand