What is Liquidity Staking?

Most decentralized exchanges (DEXs) operate by having liquidity providers deposit an equal dollar value of at least two different cryptocurrencies into a liquidity pool, this is known as Liquidity Staking. Traders then use this pool to swap between those cryptos. Each time a trade occurs, a small percentage of the total trade volume is taken as a fee, which is then distributed proportionally among all the liquidity providers in that pool.