Liquidity Pools

Liquidity pools allow you to provide liquidity by adding your tokens to liquidity pools.

When you add your token to a liquidity pool, you will receive Liquidity Pool (LP) tokens called YUMI-LP.

As an example, if you deposited YUMI and CRO into a liquidity pool, you would receive YUMI-CRO LP tokens.

The number of LP tokens you receive represents your portion of the YUMI-CRO liquidity pool.

You can also redeem your funds at any time by removing your liquidity.

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

It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. For example, whenever someone trades YumiSwap, the trader pays a 0.2% fee, of which 0.10% is added to the liquidity pool of the swap pair they traded on.

For example:

  • 10 LP tokens are representing 10 YUMI and 10 CRO tokens.

  • 1 LP token = 1 YUMI + 1 CRO

  • Someone trades 10 YUMI for 10 CRO

  • Someone else trades 10 CRO for 10 YUMI.

  • The YUMI/AME liquidity pool now has 10.010 YUMI and 10.010 CRO.

  • Each LP token is now worth 1.00010 YUMI+ 1.00010 CRO.

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 Yield Farms while still earning your 0.10% trading fee reward.

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