Liquidity Pools
Last updated
Last updated
When you add your token to a Liquidity Pool, you will receive Liquidity Provider (LP) tokens and share in the fees.
As an example, if you deposited CANARY and SGB into a Liquidity Pool, you'd receive CANARY-SGB LP tokens.
The number of LP tokens you receive represents your portion of the CANARY-SGB Liquidity Pool.
You can also redeem your funds at any time by removing your liquidity.
Providing liquidity gives you a reward in the form of trading fees when people use your liquidity pool.
Whenever someone trades on CanaryXSwap, the trader pays a 0.25% fee, of which 0.17% is added to the Liquidity Pool of the swap pair they traded on.
For example:
There are 10 LP tokens representing 10 CANARY and 10 SGB tokens.
1 LP token = 1 CANARY + 1 SGB
Someone trades 10 CANARY for 10 SGB.
Someone else trades 10 SGB for 10 CANARY.
The CANARY/SGB liquidity pool now has 10.017 CANARY and 10.017 SGB.
Each LP token is now worth 1.00017 CANARY + 1.00017 SGB.
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 , while still earning your 0.17% trading fee reward.
Providing liquidity is not without risk, as you may be exposed to impermanent loss.
