How Liquidity Pools Work — A Developer's Overview

Liquidity pools are smart contracts holding two tokens that enable decentralized token swaps via Automated Market Makers (AMMs), eliminating the need for traditional order books. Liquidity Providers deposit equal-value token pairs to earn swap fees, but face impermanent loss risk when token prices diverge significantly. The article demonstrates reading on-chain pool data using ethers.js and briefly covers Uniswap V2 vs V3 differences including concentrated liquidity.