Providing Liquidity explained

On a Camelot, a liquidity pool is a crowdsourced pool of tokens locked in smart contracts and used to facilitate trades between the assets. Automated market maker (AMM) allow digital assets to be traded in an automatic and permissionless manner through liquidity pools, replacing traditional markets of buyers and sellers

Liquidity providers will receive a portion of each transaction fee and additional incentives if they are provided for the LP pair