What do i receive when i provide liquidity to the pool?
Sunday, February 11, 2024
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Question: What do i receive when i provide liquidity to the pool?
When you provide liquidity to a pool, you receive two types of rewards: liquidity provider (LP) tokens and pool fees. LP tokens represent your share of the pool and can be redeemed at any time. Pool fees are a percentage of each trade that occurs in the pool, which are distributed to the liquidity providers proportional to their stake. By providing liquidity, you not only earn passive income from the fees, but also help the decentralized exchange (DEX) function more efficiently and securely.
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