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 ANPAN and BNB into a Liquidity Pool, you'd receive ANPAN-BNB LP tokens.
The number of LP tokens you receive represents your portion of the ANPAN-BNB 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 AnpanSwap, the trader pays a 0.2% 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 ANPAN and 10 BNB tokens.
- 1 LP token = 1 ANPAN + 1 BNB
- Someone trades 10 ANPAN for 10 BNB.
- Someone else trades 10 BNB for 10 ANPAN.
- The ANPAN/BNB liquidity pool now has 10.017 ANPAN and 10.017 BNB.
- Each LP token is now worth 1.00017 ANPAN + 1.00017 BNB.
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 ANPAN Farms, while still earning your 0.17% trading fee reward.
Impermanent Loss
Providing liquidity is not without risk, as you may be exposed to impermanent loss.