# 🌊 | Liquidity Pools

<mark style="color:green;">**Liquidity Pools**</mark> on <mark style="color:green;">**EasyX**</mark> consist of tokens that have been <mark style="color:green;">**locked by smart contracts**</mark> at the request of their holders. However, unlike traditional liquidity pools used to provide trade liquidity, on <mark style="color:green;">**EasyX**</mark>, these pools operate under a <mark style="color:green;">**trustless bankroll model**</mark>.

In this model:

1. Pools <mark style="color:green;">**earn**</mark> a percentage of the fees collected from traders.
2. Pools are <mark style="color:orange;">**used to pay out profits**</mark> to traders who have executed successful trades.

This approach is a well-established practice in both the DeFi and cryptocurrency gambling ecosystems. As a liquidity provider, your earnings depend on the <mark style="color:green;">**fees**</mark> generated and the overall <mark style="color:orange;">**profit**</mark> and <mark style="color:green;">**loss**</mark> of the traders who use the specific trading pair associated with the liquidity pool.&#x20;

This creates a dynamic and interconnected system where the rewards of liquidity providers are influenced by the success of the traders using the platform.

{% hint style="success" %} <mark style="color:green;">**Make it Easy:**</mark>

• When traders are profitable, the pools pay out the profits and suffer <mark style="color:orange;">**unrealised losses**</mark>.\
**•** When traders are losing, the pools <mark style="color:green;">**earn**</mark> the collateral that is "lost" during the trade.\
• Pools always <mark style="color:green;">**earn**</mark> a percentage (fee) from every trade, regardless of the outcome.

**Please note**, providing liquidity can entail a risk of <mark style="color:orange;">**unrealised loss**</mark> in assets if trader profitability exceeds the fees earned by a pool. &#x20;
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