4️⃣Forming LPs

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Last updated 8 months ago

4️⃣Forming LPs

You can become a liquidity provider over here https://dojo.trading/swap?type=provide&from=inj

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 DojoSwap, the trader pays a 0.30% fee, of which 0.15% is added to the Liquidity Pool of the swap pair they traded on.

For example:

There are 10 LP tokens representing 10 INJ and 10 USDT tokens.
1 LP token = 1 INJ + 1 USDT
Someone trades 10 INJ for 10 USDT.
Someone else trades 10 USDT for 10 INJ.
The INJ/USDT liquidity pool now has 10.015 INJ and 10.015 USDT.
Each LP token is now worth 1.00015 INJ + 1.00015 USDT.

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 DojoSwap Farm while still earning your 0.15% trading fee reward.

Impermanent Loss

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