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Liquidity Pool Asset Ownership

Quick question to the community, any help would be greatly apprecaited: When depositing assets to AMM liquidity pools in Stellar, are the funds kept in your wallet or are they sent to an external wallet? Assuming an inerest payout is expected to funds deposited to the liquidity pool, where does the payout land if a pay order is not complete by then? ​ Thanks in advance!
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