💰 | Liquidity

Provide Liquidity

LP Farms or Yield Farming offers the chance for users to earn rewards by investing their LP tokens in the Yield Farms. The amount of rewards you can get varies depending on the APR of the Yield Farm you choose to invest in.

Any individual can become a liquidity provider on SyncDex by depositing tokens to the liquidity pools, which allows them to earn trading fees from the liquidity.

The APR for each Yield Farm is unique and is influenced by the value of LP tokens and the price of $SND.

LP Tokens

Upon providing liquidity, you will obtain Liquidity Pool (LP) tokens that follow proportional ownership of the pool reserves and can be exchanged for the actual assets at any given moment.

Trading Fees distributed to Liquidity providers

In order to maintain consistent liquidity for seamless trading, we offer incentives to encourage investors to provide liquidity.

These incentives come in the form of a large percentage - 68% to be exact - of the 0.3% trading fee, which is given directly to liquidity providers every time someone exchanges tokens on SyncDex.

This allows liquidity providers to earn 0.17% of all trades made in the pool. As an illustration, if a trade involving 1,000,000,000 USDT were to occur, 1,700,000 USDT would be added to the liquidity pool and made available for collection by liquidity providers.

Risks involved

While earning trading fees, providing liquidity does come with the risk of impermanent loss.

Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit.