With the advent of smart contracts, the concept of passive liquidity providing has been recently popularized. In an AMM for example, LPs deposit their crypto assets, where a static equation manages their position(s). This is easy to use, anyone can stake their assets with the press of a button, but in practice, many LPs lose money and underperform a simple buy-and-hold strategy.
The ideal liquidity system has the benefits of both active and passive liquidity! We want LPs to have the flexibility they need to protect their positions and optimize returns, but the system needs to be easy to use and open to anyone.
Here is how Rubicon Pools marries active and passive liquidity providers: