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Liquidity Pools

When you add your token to a Liquidity Pool you will receive Liquidity Provider (LP) tokens and share in the fees.

LP Tokens​

As an example, if you deposited GT and LAT into a Liquidity Pool, you'd receive GT-LAT LP tokens. The number of LP tokens you receive represents your portion of the GT-LAT Liquidity Pool. You can also redeem your funds at any time by removing your liquidity.

add-liquidity

Liquidity Providers earn trading fees​

Providing liquidity gives you a reward in the form of trading fees when people use your liquidity pool.

Whenever someone trades on DipoleSwap, the trader pays a 0.25% fee, all of which 0.25% is added to the Liquidity Pool of the swap pair they traded on.

For example:

  • There are 10 LP tokens representing 10 LAT and 10 GT tokens.

  • 1 LP token = 1 LAT + 1 GT

  • Someone trades 10 GT for 10 LAT.

  • Someone else trades 10 LAT for 10 GT.

  • The GT/LAT liquidity pool now has 10.025 GT and 10.025 LAT.

  • Each LP token is now worth 1.0025 GT + 1.0025 LAT.

To make being a liquidity provider even more worth your while, you can also put your LP tokens to work whipping up some fresh yield on the LAT Farms, while still earning your 0.25% trading fee reward.

Impermanent Loss​

Providing liquidity is not without risk, as you may be exposed to impermanent loss.

“Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman