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