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 LASER and TT into a Liquidity Pool, you'd receive LASER-TT LP tokens.
The number of LP tokens you receive represents your portion of the LASER-TT Liquidity Pool.
You can also redeem your funds at any time by removing your 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 LaserSwap, the trader pays a 0.25% fee, **of which 0.2% **is added to the Liquidity Pool of the swap pair they traded on.
For example:
There are 10 LP tokens representing 10 LASER and 10 TT tokens.
1 LP token = 1 LASER + 1 TT
Someone trades 10 LASER for 10 TT.
Someone else trades 10 TT for 10 LASER.
The LASER/TT liquidity pool now has 10.02 LASER and 10.02 TT.
Each LP token is now worth 1.0002 LASER + 1.0002 TT.
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 LASER Farms, while still earning your 0.2% trading fee reward.
Impermanent Loss
Providing liquidity is not without risk, as you may be exposed to impermanent loss.
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