# 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 <a href="#lp-tokens" id="lp-tokens"></a>

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.

![](https://2332465445-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MiJbpVnL6eofHl94wyU-1703796690%2Fuploads%2Fzu72Fq5rzzPxqiT0vzMS%2Fimage.png?alt=media\&token=c706ba8f-f89b-4dfd-b9fb-178874a1b225)

## Liquidity Providers earn trading fees <a href="#liquidity-providers-earn-trading-fees" id="liquidity-providers-earn-trading-fees"></a>

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&#x20;
* 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 <a href="#impermanent-loss" id="impermanent-loss"></a>

Providing liquidity is not without risk, as you may be exposed to impermanent loss.

&#x20;[“Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman](https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22)