Hey Stonfiers! 🗿
I’ve seen many people asking about what are liquidity pools and how they work on STON.fi
So here’s a quick thread to make you understand, let’s dive into it⬇️
1/ What is a Liquidity Pool?
Imagine a big pool filled with cryptocurrencies. It’s like a balance with equal value on both sides. This is what a liquidity pool looks like. 🔄
2/ How It Works:
These pools are run by DEX smart contracts. When you swap, Token A is taken from one side, and the trader’s Token B is added to the other. This keeps trading fast and easy.
3/ Why Liquidity Pools are Important:
Without these pools, trading can’t happen easily. They make sure there are always assets to trade, so you don’t have to wait for a match. They keep DEXs running smoothly. 🚀
4/ Where Do Tokens Come From?
Tokens are added by liquidity providers. Sometimes, token creators add their own tokens to make sure people can trade them. Without these tokens, trading wouldn’t work.
5/ How You Can Earn:
If you add tokens to a liquidity pool, you earn a share of the fees from each trade. On STON.fi, this fee is 0.2% of each trade, shared among all the providers.
6/ How Fees are Shared:
For example, if you provide 50% of the liquidity, you get 50% of the 0.2% fee from each trade. The more you contribute, the more you earn💲
7/ Can You Add Liquidity?
Yes, you can! By adding liquidity, you earn part of the fees.
8/ Keeping Balance:
When you add liquidity, you need to keep both sides of the pool balanced. This means you need the right amount of both tokens in the pair. Balance is very important! ⚖️
9/ So are you Ready to Start?
Adding liquidity is a great way to earn from your crypto.
Start by providing liquidity on STONfi