# Understanding Curve Pools

It’s important to understand that when you provide liquidity to a pool, no matter what coin you deposit, you essentially **gain exposure to all the coins in the pool** which means you want to find a pool with coins you are comfortable holding.

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### **What are liquidity pools?** <a href="#what-are-liquidity-pools" id="what-are-liquidity-pools"></a>

If you are new to DeFi, liquidity pools are a seemingly complicated concept to understand.

Liquidity pools are **essentially tokens that sit in smart contracts and are used to facilitate trades between others**. If you were to create a pool of DAI and USDC where 1 DAI = 1 USDC. You would have the same amount of tokens, let’s say 1,000 tokens (1,000 DAI and 1,000 USDC) in the pool.

If trader 1 comes and exchange 100 DAI for 100 USDC, you would then have 1,100 DAI and 900 USDC in the pool so the price would tilt slightly lower for USDC to encourage another trader to exchange USDC for DAI and average the pool back.

You can see those details for each pool and it is something you can take advantage of when depositing.

<figure><img src="https://resources.curve.fi/images/ui/pool-balances.webp" alt="Pool Balances" width="500"><figcaption></figcaption></figure>

On the screenshot above for the [**TriCrypto v2 Pool**](https://curve.fi/#/ethereum/pools/tricrypto2/deposit), the three volatilely priced tokens are held in proportions similar to their price. If the coins are out of proportion traders are incentivized to take advantage of the arbitrage, which will push the balances in the pool back towards proportion

<figure><img src="https://resources.curve.fi/images/ui/tricrypto-swap.webp" alt="TriCrypto Swap" width="350"><figcaption></figcaption></figure>

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### **What are the fees?** <a href="#what-are-curve-fees" id="what-are-curve-fees"></a>

The fees for each liquidity pool vary according to the deployer's settings and are based on the results displayed on the page.&#x20;

The fees for stable pools are usually fixed, while the fees for crypto pools are typically within a range and change according to the relative volatility of the pools.

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### **How are the fees distributed?** <a href="#what-are-curve-fees" id="what-are-curve-fees"></a>

All fees will be distributed to holders of $veBITO who have voted for the specific pool. LPs will receive a certain proportion of $BITO emissions based on the $veBITO voting results.
