This article is based on Understanding DeFi - Dexes by Katana/BillyJitsu
The most straightforward way to make money in crypto is to buy a token and sell it when its value rises. However, token values fluctuate, so you might not sell at the right time. If you faced that issue in the past, you might be interested in other earning opportunities, such as providing liquidity on a decentralized exchange (DEX).
If you've heard of liquidity providers (LPs) but don't know how they make money, and how you can become one, this article is for you.
How do liquidity providers make money?
An LP makes tokens available in a DEX liquidity pool, allowing users to swap them. For each swap, the LP receives a token swap fee and incentives. The fees are a percentage of the swapped value, and the incentives are whatever the DEX deems fit to motivate LPs to provide tokens on their platform.
