Overview
Pool Rewards and Contributions
Profit and Loss Distribution: Liquidity pools distribute trader profits and absorb their losses, in addition to a fraction of the trading fees. Participants also benefit from fees generated by withdrawal transactions.
Asset Contributions: Participants have the option to deposit either ETH or USDC into the pools. Each type of asset pool operates independently, meaning your stake in the ETH pool does not affect your stake in the USDC pool.
Understanding the Risks
Inherent Risks: Engaging in liquidity pools carries certain risks. It's possible for there to be extended periods where traders collectively secure profits, potentially reducing the capital you've contributed to the pool.
Additional Concerns: Beyond market risk, participants should be aware of smart contract vulnerabilities and the potential for order mispricings, among other risks detailed in the risk disclosure document.
Risk Assessment: It's crucial to thoroughly assess these risks prior to making a deposit. It's advised to only allocate capital that you are prepared to risk losing.
Determining Your Pool Share
Share Calculation: The portion of the pool you own is determined by dividing your individual pool balance by the total pool balance. This means that deposits from other liquidity providers may dilute your share of the pool, whereas withdrawals can increase your share.
Last updated