Liquidity pools
Last updated
Last updated
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 BLH and BNB into a Liquidity Pool, you'd receive BLH-BNB LP tokens. The number of LP tokens you receive represents your portion of the BLH-BNB 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 PancakeSwap, the trader pays a 0.30% fee, of which 0.15% is added to the Liquidity Pool of the swap pair they traded on.
For example:
There are 10 LP tokens representing 10 BLH and 10 BNB tokens.
1 LP token = 1 BLH + 1 BNB
Someone trades 10 BLH for 10 BNB.
Someone else trades 10 BNB for 10 BLH.
The BLH/BNB liquidity pool now has 10.015 BLH and 10.015 BNB.
Each LP token is now worth 1.00015 BLH + 1.00015 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 BLH Farms, while still earning your 0.15% trading fee reward.
Providing liquidity is not without risk, as you may be exposed to impermanent loss.