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 AFI and ETH into a Liquidity Pool, you'd receive AFI-ETH LP tokens.

The number of LP tokens you receive represents your portion of the CAKE-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 AstroFi, 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 AFI and 10 ETH tokens.

• 1 LP token = 1 AFI + 1 ETH

• Someone trades 10 AFI for 10 ETH.

• Someone else trades 10 ETH for 10 AFI.

• The AFI/ETH liquidity pool now has 10.017 AFI and 10.017 ETH.

• Each LP token is now worth 1.00017 AFI + 1.00017 ETH.

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 AFI 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.

"“Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman"