Liquidity pools

A liquidity pool is a smart contract holding two tokens, such as SOL and USDC. Traders swap against the pool instead of against another person, and the pool’s formula sets the price from the balance of the two tokens.

People who deposit tokens into the pool are liquidity providers (LPs). In return they earn a share of every trading fee, in proportion to how much of the active liquidity they supply.

Three kinds of pool

Full range

Liquidity is spread across every possible price, from zero to infinity. Simple and always active, but most of the capital sits at prices that never trade.

Concentrated

You choose a price range. All your capital works inside it, so it earns far more per dollar, but only while price stays in range. Used by Uniswap, PancakeSwap, Aerodrome, Ramses and Raydium.

Bin-based (DLMM)

Liquidity sits in discrete price bins, and only the active bin trades. Used by Meteora.

Invictus puts all three side by side in Discover, normalised to the same fee, depth and risk metrics.

What an LP earns, and risks

You earn trading fees, and sometimes incentive tokens. You take on impermanent loss: as the price moves, the pool sells the token that is rising and buys the one that is falling, so you can end with less value than if you had simply held.