Liquidity
What is providing liquidity?
The AMM model, unlike the traditional order book model, utilizes liquidity pools to streamline the trading process. Liquidity providers (LPs) are responsible for providing liquidity, which involves depositing two tokens of their choice into a designated liquidity pool or creating a new one. The AMM algorithm generates quotes based on the pool's asset liquidity to offer trading prices to buyers and sellers. LPs receive LP tokens as evidence of their liquidity provision and rewards for their service.
Why provide liquidity?
Yeeldx allows LPs to earn a portion of all trades executed on the token pair to which they have provided liquidity. Transaction fees, charged to users for token trades, are automatically sent to the YLP tokens (Yeeldx's equivalent of LP tokens), increasing in value over time.
What are the risks?
Providing liquidity to a token pair poses the risk of impermanent loss (IL). This occurs when the price of an LP's deposited assets changes relative to the initial deposit. The magnitude of the change determines the degree of IL. Essentially, this means less dollar value at the time of withdrawal than at the time of deposit.
How much fees does Yeeldx charge?
Dynamic fees are a new feature introduced by Yeeldx that vary depending on the token pair being traded. The fees charged to trade different token pairs differ due to the risks that different LP providers face. The default fee for most pairs is 0.3%, and further details can be found on the dynamic fees page.
What if I don't want to provide liquidity anymore?
Users can redeem their Yeeldx LP tokens at any time to receive the two original tokens deposited into the liquidity pool, as well as any rewards accrued during the process.
TVL Status: To learn about Yeeldx's total value locked (TVL) check www.yeeldx.com
How to provide liquidity:
Click "pool"
Click "add liquidity"
Enter the desired amount that you'd like to provide liquidity to and allow Yeeldx to use your tokens to provide liquidity.
Then hit "supply" and "confirm supply".
After hitting "confirm" again in your wallet's pop up window, your transactions will be approved.
And that's it you are done! You have now successfully provided liquidity and have YLP in your wallet as proof.
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