What is a pool in DeFi: liquidity pool vs lending pool
What is a pool in DeFi: liquidity pool vs lending pool
A pool in DeFi is a shared reserve of tokens, deposited by many users at once, that a protocol uses to do something collectively (trade, lend, or otherwise generate yield) rather than matching each user to an individual counterparty. Two kinds of pools account for nearly all the ones you'll run into: liquidity pools and lending pools, and they solve genuinely different problems despite both being called "pools."
How it works
A liquidity pool, the kind that powers DEXs like Uniswap, holds a pair of assets (or sometimes more) that traders swap against. Depositors add both assets in the pool's required ratio and earn a share of every trading fee generated, proportional to their share of the pool. There's no borrower on the other side of a liquidity pool. It exists purely to let one asset trade against another, with the pool itself acting as the ever-present counterparty.
A lending pool, the kind Aave and Compound run, holds a single asset that suppliers deposit to earn interest and borrowers draw against posted collateral. Unlike a liquidity pool, a lending pool has two genuinely distinct sides, suppliers and borrowers, and the pool's interest rate adjusts based on utilization: how much of the supplied capital is currently out on loan. High utilization pushes rates up for both sides, pulling in more supply and cooling off borrowing; low utilization does the reverse.
The confusion between the two comes from vocabulary, not mechanics. Both are called pools because both aggregate many depositors' capital into one shared, contract-controlled reserve instead of a peer-to-peer match. What that pooled capital actually does, facilitate trades or fund loans, is where they diverge completely.
Why it matters
The distinction matters because the risks are different. A liquidity pool depositor's main risk is impermanent loss, the pool's asset ratio moving unfavorably against what they'd have earned just holding the assets. A lending pool depositor's main risk is borrower default or a liquidation shortfall, the pool not having enough collateral value to make suppliers whole if borrowers can't repay.
Getting the category right also matters for yield comparison. A "20% APY" liquidity pool and a "20% APY" lending pool are not the same risk for the same number: one is compensating for market-making risk, the other for credit risk, and comparing the headline yields without understanding which pool type you're looking at is how a lot of DeFi capital gets mispriced.
Where this shows up in Rekord
Rekord's lending markets are lending pools in this sense (though isolated per Morpho Blue market rather than shared across a whole protocol), never liquidity pools, since the yield source is credit, not trading fees. For how deposits move through those markets, see What is TVL (total value locked), and why the number gets gamed.