Liquidity Pools

Brief overview of liquidity pools and how we apply them to MYSO v1

Before diving into creating and managing pools on MYSO v1 catered towards facilitating ZLLs between lenders and borrowers, let's quickly walk through the basics of liquidity pools.

A liquidity pool is essentially a crowdsourced pool of cryptocurrencies or tokens locked in a smart contract that is used as liquidity for facilitating trades and managing assets within a protocol.

Liquidity pools have been revolutionary catalysts in bringing in billions of dollars of retail and institutional liquidity to DeFi and have led to the rise of many standout protocols that push the boundaries of on-chain trading and debt markets.

While Uniswap and other decentralized exchanges utilize liquidity pool infrastructure for trading assets, conventional lending protocols like Aave and Compound implement liquidity pools as specialized lending pools.

Lending pools are positioned specifically for financial interactions between borrowers and lenders. Liquidity providers (lenders in this case) deposit their tokens into these lending pools, which are specially designed to earn interest, while borrowers are able to borrow funds from pools by putting up their crypto as collateral.

MYSO v1 implements liquidity pools in a non-custodial, permissionless manner, meaning that any user is able to create their own asset-pair-specific ZLL pool.