# Liquidity pool

## Definition

A liquidity pool is a smart-contract-controlled reserve of assets used by DeFi protocols for swaps, lending or other financial operations.

## What it means in practice

Users who supply liquidity can receive fees or incentives but may also face price exposure, smart-contract risk and impermanent loss.

## How this concept appears in Terenval Wallet

Terenval can sign transactions to compatible liquidity-pool dApps through WalletConnect, but the pool itself is external protocol logic.

**Important:** Do not treat a liquidity-pool position as equivalent to keeping the same tokens idle in a wallet.

**[Install Terenval Wallet](https://wallet.terenval.com/?lang=en)**

## Related terms

- [DeFi](https://wallet.terenval.com/glossary/defi/)
- [Automated market maker](https://wallet.terenval.com/glossary/automated-market-maker/)
- [Liquidity provider](https://wallet.terenval.com/glossary/liquidity-provider/)
- [Yield farming](https://wallet.terenval.com/glossary/yield-farming/)
- [smart contract](https://wallet.terenval.com/glossary/smart-contract/)
- [Token approval](https://wallet.terenval.com/glossary/token-approval/)

## Related Terenval Answers

- [How to Secure a Non-Custodial Crypto Wallet](https://wallet.terenval.com/answers/how-to-secure-non-custodial-crypto-wallet/)
- [How to Send Crypto Safely Between Wallets](https://wallet.terenval.com/answers/how-to-send-crypto-safely-between-wallets/)
- [Can One Crypto Wallet Manage Multiple Blockchains?](https://wallet.terenval.com/answers/can-one-crypto-wallet-manage-multiple-blockchains/)

## Sources

- https://ethereum.org/en/defi/
- https://docs.walletconnect.network/
- https://wallet.terenval.com/info/security/

Official page: https://wallet.terenval.com/glossary/liquidity-pool/