Liquidity Provision
Earn fees by providing liquidity to decentralized exchanges (DEXs)
What's Liquidity Provision?
Understanding how liquidity pools work
Liquidity provision is the process of depositing pairs of tokens into a decentralized exchange's trading pool. These pools enable other users to trade tokens directly, without the need for a traditional order book.
When you provide liquidity, you're essentially creating a market for others to trade against. In return, you earn a portion of the trading fees generated from each swap that occurs in your pool.
Trading Fees
Earn from market activity
Collect a portion of trading fees from every swap in your liquidity pool
High Yields
Attractive returns
Potential for high APY through trading fees and incentive rewards
Risk Management
Understanding impermanent loss
Learn to manage risks and optimize your liquidity provision strategy
Top DEX Platforms
Popular platforms for liquidity provision
Uniswap
Ethereum-based DEX
0.3% Fee Share
PancakeSwap
BSC-based DEX
0.17% Fee Share
Curve Finance
Stablecoin-focused DEX
0.04% Fee Share
Key Considerations
Important factors to consider before providing liquidity
Impermanent Loss
Understand how price changes between paired assets can affect your returns
Gas Fees
Consider transaction costs when depositing and withdrawing liquidity
Pool Selection
Choose pools with stable pairs and sufficient trading volume
Smart Contract Risk
Research platform security and audit status before committing funds