Liquidity
Last updated
Last updated
The liquidity pool contains two types of assets that can be exchanged between users. No market maker, order taker, or order book is required and the price is determined by the ratio of the assets in the pool. Users who deposit token pairs into the pool to facilitate transactions are known as "liquidity providers". Liquidity providers charge a small fee to users who borrow their tokens to complete an exchange. Providing liquidity therefore means making individual assets available to the market.
When a token pair is deposited into the liquidity pool, the user receives an LP Token as a "receipt", which represents the user's share of the pool and also represents proof of redemption of the deposited tokens and receipt of the profit. The LP tokens are therefore held to provide a degree of security for personal deposits. If LP tokens are lost, the shares invested will be lost in full.
LP tokens are only allocated to liquidity providers.
When liquidity is provided, LP tokens are stored in the wallet used by the user. To view LP tokens in a personal cryptocurrency wallet, a smart contract for LP tokens is added and most LP tokens in the DeFi ecosystem can be transferred between wallets, thereby transferring ownership, for the purpose of maximising profits.
After entering the [Transactions - Liquidity] page, users can access the [Add Liquidity] portal to select the token pair to be deposited to provide liquidity to the corresponding pool, and also to obtain LP Token.[]
Users can search for a name or copy a token contract address at [Select Currency] to select or add a currency name.
