Here's a good explanation of what liquidity pools are and how they work in practice: https://undergrowthgames.com/everything-about-crypto-liquidity-pools/ . I've been putting money into pools on Uniswap and PancakeSwap for a year and a half now — I consistently get 12-18% APY on pairs like USDC/ETH. Pros: passive income, can be withdrawn at any time, no lock-up like in staking. Cons: impermanent loss (when the rate changes significantly, you lose compared to just holding), plus gas fees. For large amounts, I recommend stable-stable pools (USDT/USDC), where the risk is minimal. I earn more than on a deposit, but it's not risk-free — I start with £500-1000 to test it out.
Here's a good explanation of what liquidity pools are and how they work in practice: https://undergrowthgames.com/everything-about-crypto-liquidity-pools/ . I've been putting money into pools on Uniswap and PancakeSwap for a year and a half now — I consistently get 12-18% APY on pairs like USDC/ETH. Pros: passive income, can be withdrawn at any time, no lock-up like in staking. Cons: impermanent loss (when the rate changes significantly, you lose compared to just holding), plus gas fees. For large amounts, I recommend stable-stable pools (USDT/USDC), where the risk is minimal. I earn more than on a deposit, but it's not risk-free — I start with £500-1000 to test it out.