Liquidity Pools
Last updated
Last updated
When you add your token to a Liquidity Pool you will receive Liquidity Provider (LP) tokens and share in the fees.
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.
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.
Providing liquidity is not without risk, as you may be exposed to impermanent loss.
