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 CPF and CP into a Liquidity Pool, you'd receive CPF-CP LP tokens.

The number of LP tokens you receive represents your portion of the CPF-CP 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 CPSwap, 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 CPF and 10 CP tokens.

  • 1 LP token = 1 CPF + 1 CP

  • Someone trades 10 CPF for 10 CP.

  • Someone else trades 10 CP for 10 CPF.

  • The CPF/CP liquidity pool now has 10.017 CPF and 10.017 CP.

  • Each LP token is now worth 1.00017 CPF + 1.00017 CP.

Impermanent Loss

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

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