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 HOPE and GDCC into a Liquidity Pool, you'd receive HOPE-GDCC LP tokens.
The number of LP tokens you receive represents your portion of the HOPE-GDCC 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 Hopium, the trader pays a 0.25% fee, of which 0.10% is added to the Liquidity Pool of the swap pair they traded on.
- There are 10 LP tokens representing 10 Hope and 10 GDCC tokens.
- 1 LP token = 1 Hope + 1 GDCC
- Someone trades 10 Hope for 10 GDCC.
- Someone else trades 10 GDCC for 10 Hope.
- The Hope/GDCC liquidity pool now has 10.010 Hope and 10.010 GDCC.
- Each LP token is now worth 1.00010 Hope + 1.00010 GDCC.
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 Hope Farm , while still earning your 0.10% trading fee reward.
Providing liquidity is not without risk, as you may be exposed to impermanent loss.