VECTOR_ANALYSIS // FINANCE
Liquidity Pool
NODE: LIQUIDITY-PO
VERIFICATION: PASSED
01_DEFINITION
Strict Definition
"Crowdsourced funds (usually a pair of tokens) locked in a smart contract that facilitate decentralized trading on an Automated Market Maker (AMM)."
Liability Check // Risk Analysis
The 'Impermanent Loss' risk. If the price of one token in the pool changes significantly compared to the other, the liquidity provider may end up with less value than if they had simply held the tokens in a wallet.
Knowledge Context // Related Terms
Auditor NotesVS-AN-2026
Strategy Domain
"Provide liquidity only for token pairs with high correlation or low volatility to minimize price divergence risk."
Operations Standard
"Monitor pool depth. Low liquidity leads to high 'Slippage,' which can significantly impact execution prices for large trades."
Legal & Compliance
"Report yield earned from liquidity provision as 'Interest Income' or 'Capital Gains' based on local tax rules."
DOCUMENT_ID: CW3-LIQUIDITY-POOL-2026
SCHEMA_VER: AEO_3.2
LAST_AUDIT: 1/8/2026
HASH: TA2NT
SCHEMA_VER: AEO_3.2
LAST_AUDIT: 1/8/2026
HASH: TA2NT