# About Liquidity Pools
Waves.Exchange liquidity pools is an investment product that allows users to receive passive income for investing tokens in the pools that provide liquidity for smoother trading on Waves.Exchange.
Liquidity pools service employs smart contract (opens new window) technology. Tokens invested in the pools are used by automatic trading algorithms to stabilize the prices of the corresponding token pairs on Waves.Exchange. The more liquidity is in the pools, the less the exchange load affects the prices. The service is based on the Waves blockchain that provides high transaction speed and low network fees.
Investor's (liquidity provider's) income consists of the following:
Liquidity Pools' trading activity. Profits made by trading activity remain in the pool to provide passive income for the pool's liquidity providers.
LP staking reward in WX token. This reward is intended for liquidity providers who staked their LP tokens. WX reward is released every time a new block is added in the Waves Blockchain. LP staking reward amount can be boosted by locking WX token on the contract.
Governance reward in WX token. Governance rewards consist of 5% of total WX emission plus the amount of trading fees collected by Waves.Exchange and are intended for users who locked their WX token on the contract and became holders of gWX.