> For the complete documentation index, see [llms.txt](https://docs.blacksail.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.blacksail.finance/faq/what-is-liquidity-staking.md).

# 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.