Liquidity Pool

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 UGT and UUSDT into a Liquidity Pool, you'd receive UGT-UUSDT LP tokens.

The number of LP tokens you receive represents your portion of the UGT-UUSDT 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 UNIGATE, 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 UGT and 10 UUSDT tokens.

  • 1 LP token = 1 UGT + 1 UUSDT

  • Someone trades 25 UGT for 25 UUSDT.

  • Someone else trades 25 UGT for 25 UUSDT.

  • The UGT/UUSDT liquidity pool now has 25.034 UGT and 25.034 UUSDT.

  • Each LP token is now worth 1.00017 CAKE + 1.00017 BNB.

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 UGT farm,, 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

Last updated