The Swappery — The Liquidity Pools on our DEX
The Swappery is the first cross-chain Decentralized Exchange (DEX), built for the Casper Network. On The Swappery you can not only swap your tokens for other ones but you can also provide liquidity to earn additional token rewards. Our platform will give thousands of Casper holders the opportunity to make great use of their Casper tokens. The Swappery ensures to further expand and improve the Casper Network ecosystem to be one of the leading in the industry.
Why add to a Liquidity Pool
To accomplish profound liquidity, Automated Market Makers (AMMs) need to incentivize users to deposit liquidity into the pools. This incentivization is done by giving liquidity providers token rewards as fees from trading. This token reward is called the Liquidity Pair tokens (LP tokens).
The general idea of Liquidity Providing is that users earn token rewards in exchange for providing liquidity to AMMs’ pools to facilitate token swaps. This is similar to depositing fiat money to a savings account in a bank and collecting interest on the deposited assets.
The more complex approach which earns you more APY by using your Liquidity Pair tokens is called Yield Farming. More information on Yield Farming will be given in one of the coming articles.
How do I add to a Liquidity Pool
To add liquidity to a liquidity pool, you will need to add both tokens of the trading pair you would like to provide liquidity for, to the pool. Don’t have both tokens? Feel free to use The Swappery Token Swaps to get them! After all, that’s what we are for!
How do I profit from a Liquidity Pool
As mentioned previously, providing liquidity earns you rewards. These rewards are paid for by the trading fees a trader pays when using the Token Swaps.
Whenever someone trades on The Swappery Dex, the trader pays a trading fee. A part of this trading fee is added to the liquidity pool. Since no new liquidity tokens are minted, this has the effect of splitting the transaction fee proportionally between all existing liquidity providers.
An example
You have $10 worth of CSPR and $10 worth of SWPR tokens. You have the option to either create a new Liquidity Pool if there is none or add to an existing Liquidity Pool. The Liquidity pool that you are adding liquidity to is the CSPR/SWPR pool.
Automatically your Liquidity in the Liquidity Pool will start earning a percentage of the trading fees paid by traders using the pool. You don’t have to do anything else!
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