Protocol
Liquidity
The pool that makes trading possible, and the risk that comes with providing it.
A market’s creator provides its opening liquidity and is its first liquidity provider. Anyone can add liquidity until the market settles, and remove it at any time.
Providing liquidity means taking risk. The pool takes the other side of every trade, and at settlement it tends to be left holding the losing side. Liquidity providers can lose part of what they put in.
The liquidity fee is currently zero. The creator is compensated through the creator fee instead, which pays for that risk and is not guaranteed income.