Search our executive blockchain insights and services.
…Liquidity Provider (LP) A succinct definition of Liquidity Provider (LP) Liquidity Provider (LP)Level UpNEWIndividualsBusinessesDevelopersDiscoverCompanyGLOSSARYLIQUIDITY PROVIDER (LP)Copy linkShare on TwitterShare on FacebookShare on LinkedinLiquidity Provider (LP)A liquidity provider (LP) is someone who puts liquidity (funds) into a decentralised exchange (DEX). They are usually an individual or a group that funds a liquidity pool in decentralised finance (DeFi) with their own cryptocurrency a…
Learn More
…Liquidity Providers Liquidity providers (LPs) are users who add their tokens to liquidity pools. In return, they receive liquidity tokens that represent their share of the pool. LPs earn a fraction of the transaction fees generated by the trading activity within the pool. This fee compensates them for the risk of potential impermanent loss. 4. Impermanent Loss Impermanent loss occurs when the prices of tokens in a liquidity pool change compared to when they were deposited. The more significant t…
Learn More
Liquid Staking: What It Is and How It Works Liquid staking is a revolutionary tool allowing users to access already-staked tokens for other purposes. Here’s how it works. Liquid Staking: What It Is and How It WorksLevel UpNEWIndividualsBusinessesDevelopersDiscoverCompanyUNIVERSITYTrading15 Nov 2023|INTERMEDIATE|6 MIN READLiquid Staking: What It Is and How It WorksLiquid staking is a revolutionary tool allowing users to access already-staked tokens for other purposes. Here’s how it works. Key…
Learn More
…Here’s how they interact with each other. Key Takeaways: In the cryptocurrency market, market makers provide liquidity by placing buy and sell orders on the order book, profiting from bid-ask spreads. Market takers, in contrast, seek immediate execution by matching their trades with existing orders, often using market orders. Market makers are often entities specialising in providing liquidity, such as trading firms or liquidity providers, and play a critical role in maintaining a liquid mar…
Learn More
…They are primarily used to facilitate decentralised finance (DeFi)-related activities, such as lending, trading, and swapping, on a decentralised exchange (DEX). This technology functions via a mechanism that allows users, or liquidity providers (LPs), to pool their digital assets in a DEX’s smart contract. In exchange, the LPs receive certain rewards (typically in the form of trading fees) in proportion to the liquidity they supplied. The benefit of a liquidity pool is that it does not requ…
Learn More
…It allows users to provide their funds to a protocol for liquidity, thus becoming liquidity providers (or LPs) and receive incentives in return. These are usually in the form of a portion of the platform’s generated trading fees that are allocated back to the LP. As with any market, there are risks, such as impermanent loss (IL), which can occur after depositing your assets into a liquidity pool and the price of the tokens rises or decreases. For more information on IL, check out this articl…
Learn More
…Below is a breakdown of how it operates: Liquidity Pools: At its core, Uniswap relies on liquidity pools, or collections of cryptocurrencies deposited into smart contracts by users (also called liquidity providers, or LPs). In exchange for their deposited cryptocurrencies, LPs receive liquidity tokens representing their contribution to the pool. Trading: In this trading method, individuals engage directly with the liquidity pool when initiating a trade, rather than having their buy and sell …
Learn More
…It pools liquidity from liquidity providers (LPs) who supply the system with tokens for a proportional share of transaction fees. The AMM portion of MM Finance allows for liquidity to be provided to the exchange, and it operates through automated trading methods. MM Finance handles a large volume of trades on the Cronos blockchain, and users can find different yield farming opportunities from over 20 different farms. Since MM Finance does not have an order book, it relies on pooled liquidity. Us…
Learn More
…As an Ethereum token, CRV runs Curve.fi, a decentralised exchange and automated market maker (AMM) protocol, which aims to swap the exchange of comparable ERC-20 tokens, especially stablecoins (such as USDC and DAI) and Ethereum-based Bitcoin tokens (like WBTC and renBTC). CRV is now available on DeFi Swap, and users can swap CRV and be CRV liquidity providers to earn fees and boost their yield by up to 20x when staking CRO. A brief history of Curve DAO Token Curve DAO was established and lau…
Learn More
…A liquidity provider (LP) deposits an asset into a liquidity pool, which then adds liquidity, the availability of funds for trading, to the platform. Liquidity pools are most commonly composed of two assets — pairs — but can contain more. Users usually become LPs hoping to earn liquidity pool fees. The liquidity pool represents the different assets deposited into them, and users can interact with the pools through borrowing, lending, and staking. Token pairs are impacted more if one token …
Learn More