Liquidity Pools
When you add your token to a Liquidity Pool you will receive Gol Liquidity Provider (GLP) tokens and a share in the fees distribution.
GLP Tokens
As an example, if you deposited GOL and BNB into a Liquidity Pool, you'd receive GOL-BNB GLP tokens.
The number of LP tokens you receive represents your portion of the GOL-BNB Liquidity Pool.
You can also redeem your funds at any time by removing your liquidity.
Liquidity Providers earn trading fees
Providing liquidity gives you a reward in the form of trading fees when people use your liquidity pool.
Whenever someone trades on GolSwap, the trader pays a 0.25% fee, of which 0.17% is added to the Liquidity Pool of the swap pair they traded on.
For example:
There are 10 LP tokens representing 10 GOL and 10 BNB tokens.
1 GLP token = 1 GOL + 1 BNB
Someone trades 10 GOL for 10 BNB
.
Someone else trades 10 BNB for 10 GOL.
The GOL/BNB liquidity pool now has 10.02 GOL and 10.02 BNB.
Each LP token is now worth 1.0002 GOL + 1.0002 BNB.
To make being a liquidity provider even more worth your while, you can also put your GLP tokens to work whipping up some fresh yield on the GolFarm, while still earning your 0.17% trading fee reward.
Impermanent Loss
Providing liquidity is not without risk, as you may be exposed to impermanent loss.
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