XSwap Protocol
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On this page
  • LP Tokens
  • Liquidity Providers earn trading fees
  • Impermanent Loss
  1. PRODUCTS
  2. V2 DEX
  3. SWAP

Liquidity Pools

PreviousHow to TradeNextHow to Add/Remove Liquidity

Last updated 2 years ago

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 XSP and XDC into a Liquidity Pool, you'd receive XSP-XDC LP (XSP2) tokens.

The number of LP tokens you receive represents your portion of the XSP-XDC 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 XSwap, the trader pays a 0.3% fee, of which 0.214% is added to the Liquidity Pool of the swap pair they traded on.

For example:

  • There are 10 LP tokens representing 10 XSP and 10 XDC tokens.

  • 1 LP token = 1 XSP + 1 XDC

  • Someone trades 10 XSP for 10 XDC.

  • Someone else trades 10 XDC for 10 XSP.

  • The XSP/XDC liquidity pool now has 10.0214 XSP and 10.0214 XDC.

  • Each LP token is now worth 1.00214 XSP + 1.00214 XDC.

Impermanent Loss

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

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 0.214% trading fee reward.

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