Liquidity pool

Liquidity pool is a smart-contract container that replaces a traditional order book. Instead of matching buyers and sellers, a DEX executes swaps directly against the pool’s reserves using an AMM formula. Anyone depositing tokens becomes a liquidity provider (LP) and earns a proportional share of every swap fee.

How it works

A classic pool holds two tokens in equal value, for example TON and USDT, with each side worth the same in dollars. Call the reserves x (TON) and y (USDT). On every swap an AMM enforces an invariant — most commonly x * y = k, the constant product model (CPMM). When a trader sends TON in to take USDT out, x rises, y falls, and the product stays the same. That shift defines the new price inside the pool.

Each swap pays a fee, typically 0.2–0.3% of volume. Those fees stay inside the pool, growing the reserves. Each LP token therefore represents a slightly bigger share of underlying tokens than at mint time.

Why people supply liquidity

Liquidity providers want passive yield from trading activity. They deposit a proportional amount of both tokens and receive an LP token representing their share. Yield comes from two sources:

• Swap-fee share, proportional to the LP’s share of the pool and the volume traded against it.
• Additional emissions (farming). Many protocols pay LP-token holders extra rewards in the protocol’s native token.

Working against this is impermanent loss — when the prices in the pair diverge, exiting the pool returns less than simply holding the two tokens separately would have.

Pools on TON

TON’s DEX infrastructure is built around jetton pools:

• STON.fi — one of the largest DEXs on the network, classic two-token CPMM pools.
• DeDust — competing DEX with extended pool types and asymmetric weights.
• Bidask — focused on concentrated liquidity, closer in spirit to Uniswap V3.

Most pools have TON or a USDT jetton (jUSDT or native Tether USDT) on one side, creating central liquidity hubs that exotic pairs route through.

What to look at in a pool

• TVL — the total value locked in the pool. Deeper pools mean less slippage on large trades.
• 24-hour volume — fee generation. High volume with low TVL often yields better LP APR but also more impermanent loss exposure.
• Pool fee — usually 0.2–0.3%, lower for stable-stable pools, sometimes higher for exotic pairs.
• Contract audit — even on established DEXs, forks and new pool types have shipped bugs.

Risks

A liquidity pool is not a deposit. On top of standard DeFi risks (contract bugs, oracle exploits, one side of the pair collapsing), LPs face impermanent loss plus concentration risk: if a single whale holds most of the LP supply, their exit can move the pool price more than expected.