What Is Liquidity Provisioning on AMMs and Where Does the Yield Come From?

Decentralized exchanges (DEXs) allow users to trade crypto assets without a central intermediary. Instead of matching buyers and sellers through an order book, most DEXs rely on Automated Market Makers (AMMs). AMMs are the foundation of decentralized trading — and liquidity providers (LPs) are the participants who make these markets work. This article explains what liquidity provision is, how AMMs work at a high level, and where LP yield comes from.