When you add tokens to the liquidity pool, you will earn liquidity pool (LP) tokens and share fee revenue.
For example, if you deposit EVMOS and USDC into the liquidity pool, you will receive EVMOS-USDC LP tokens.
The number of LP tokens you receive represents your share of the EVMOS-USDC liquidity pool. You can also redeem funds at any time by removing liquidity funds.
Liquidity providers earn transaction fees
When someone trades with your liquidity pool, you will earn a corresponding fee as a reward. The trader will pay a fee of 0.3%, of which 0.15% will be added to the liquidity pool of the pair they are trading.
● 10 LP tokens represent 10 STAR and 10 USDT tokens
● 1 LP token = 1 STAR + 1 USDT
● Someone trades 10 STAR for 10 USDT
● Other people trade 10 STAR for 10 USDT
● STAR/USDT liquidity pool now has 10.015 STAR and 10.015 USDT
● Each LP token is now worth 1.00015 STAR + 1.00015 USDT
To get even more value out of being a liquidity provider, you can also put LP tokens into the Farm to earn more revenue while still receiving the 0.15% transaction fee bonus.
Providing liquidity is not without risk, as you may be exposed to impermanent losses.