Pi Swap is a decentralized exchange with a new concept that allows users to trade without the need for an intermediary exchange. Every transaction you make on Pi Swap is directly transferred to your wallet, without any third party able to interfere with your transactions.
You can swap tokens on Pi Swap if there is sufficient liquidity for those tokens on the platform. If no one has provided enough liquidity for the tokens you want to swap, the swapping process can become highly risky. A price slippage warning will appear to remind you to consider the risks before proceeding with the swap, as the token may not have enough liquidity to ensure an accurate valuation during the swap.
Having sufficient liquidity for a token helps mitigate the risks of price slippage and safeguards your assets during the swapping process on Pi Swap.
In summary, providing liquidity for a token is crucial and indispensable for decentralized exchanges.
Yield farming allows users to provide liquidity to Pi Swap and earn PI rewards by staking their LP tokens into an automated smart contract that distributes rewards based on the liquidity users can provide. However, before considering earning rewards, users need to understand the risks associated with impermanent loss that come with farming liquidity.